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AUSSIE 10-YEAR TECHS

(Z1) Off Lows, But Remains Weak

USDCAD TECHS

Still Vulnerable

AUDUSD TECHS

Bullish Price Sequence

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NZD/USD ground lower Monday as China's Evergrande saga dented risk appetite, with the rate briefly probing the water under its 50-DMA. It has remained heavy as trading resumed this morning and last sits at $0.7022, just shy of neutral levels. Some mild pressure to the kiwi has been generated by RBNZ speak, which poured some cold water on expectations of double-barrel rate hikes.

  • The RBNZ released comments from Asst Gov Hawkesby on "a least regrets approach to uncertainty". The official suggested that the Reserve Bank is inclined to tighten monetary policy settings gradually, noting that "when there is a typical amount of uncertainty, and the risks are evenly balanced, then central banks globally tend to follow a smoothed path and keep their policy rate unchanged or move in 25 basis point increments".
  • The OIS strip now fully prices just one standard 25bp OCR hike in October, in contrast with 34bp worth of policy tightening priced yesterday.
  • As a reminder, PM Ardern yesterday announced that Auckland will move to alert Level 3 from Level 4 at midnight today and remain at that level for at least two weeks.
  • Statistics New Zealand will publish credit card spending for the month of August today. Later this week, trade balance will take focus on Friday.
  • The 50-DMA at $0.7011 continues to provide the initial bearish target and a clean breach of that moving average would open up Aug 30 low of $0.6987. On the flip side, a rebound above Sep 16 high of $0.7138 would expose Sep 14/10 highs of $0.7151/56.

Fig. 1: BBG WIRP Estimated OCR Change - Oct '21 Meeting

Source: MNI - Market News/Bloomberg