RBNZ Sends Kiwi Higher, Orr Thinks Tightening Possible In Mid/Late 2022

The RBNZ was behind the kiwi's stellar performance on Wednesday, as it provided a hawkish surprise and suggested that it may start tightening policy in mid-2022. NZD/USD surged above May 10/Mar 2 highs of $0.7305/07 after the RBNZ announced their policy decision, but failed to hold above there and trimmed gains later in the day. The kiwi remained the best performer in G10 FX space.

• NZD/USD implied overnight volatility eased from its one-month high after the MPS was released and last sits at 9.95%.
• NZD/USD trades flat at $0.7282 as we type and a break above Wednesday's high of $0.7316 would bring Feb 25 high of $0.7465 into play. On the flip side, a slide through May 19 low/50-DMA at $0.7152/45 would draw attention to May 13 low of $0.7135.
• In the latest round of post-MPS comments, RBNZ Gov Orr reiterated that interest rates may rise next year it things evolve as expected, adding that "we may be able to tighten in mid to late 2022". Separately, Orr told RNZ that "the reason we removed the sentence around we remain willing to cut the OCR was largely because we thought we could say it once, we didn't need to keep saying it. The projections suggest we don't need to at this point, but we would be willing to if needed."
• Focus in New Zealand moves to ANZ Consumer Confidence, due Friday.