RBNZ Ready To Tighten Lending Restrictions, Jobs Data Take Focus From Here

NZD/USD went offered Tuesday as risk appetite turned sour from the off, with the greenback catching a fresh bid post-WMR fix as U.S. Tsy Sec Yellen said higher interest rates may be needed to prevent the economy from overheating (she played down these remarks later on). NZD/USD pulled back under the $0.7200 mark captured on Monday.

• The RBNZ's latest Financial Stability Report is out. The Reserve Bank warned that "a high proportion of new lending has had high debt-to-income and loan-to-value ratios." The Bank keeps an eye on housing prices and stand ready to tighten LVR restrictions further or deploy additional tools if required.
• Higher earners among NZ public servants must prepare for more austerity measures. Public Service Min Hipkins announced a three-year pay freeze for most of those with an annual salary north of NZ$60,000, as the gov't tries to keep a lid on public debt.
• Worth mentioning that Fonterra's shares are in a trading halt until Friday, as the co-operative seeks shareholders' opinions on a potential change of its capital structure.
• New Zealand's Q1 labour market report headlines the local data docket today, with the unemployment rate expected to remain unch. at 4.9% (per BBG consensus forecast).
• Later in the day, RBNZ Gov Bascand & colleagues will provide some comments on the FSR. Gov Orr is on sick leave and won't be present.
• Thursday will see the release of building permits data & flash ANZ Business Confidence, with inflation expectations coming up Friday.
• NZD/USD sits at $0.7150, a touch higher on the day. A break above May 3 high of $0.7212 would shift focus to Apr 29 high of $0.7287. Conversely, a fall through Tuesday's low of $0.7116 would open up the $0.7100 mark.