Recovers Off Fresh Cycle Lows, Manufacturing PMI Prints Soon

NZD/USD currently sits just under $0.5640 little changed from late NY levels. We touched a fresh cycle low at $0.5512 post the US CPI print, but rebounded strongly from there, as the recovery in broader risk appetite hit USD sentiment (DXY off 0.75% to 112.47).

• U.S. CPI rose to a 40 year high in September, firming the case for the Fed to continue on its hawkish rate hike path. Still, US Equities roared back from worst levels, the S&P 500 closed up 2.6% after recovering 5% off its post CPI lows.
• Despite the impressive overnight rebound, NZD/USD remains in a technical downtrend, with the cyclical lows breached, bears can target the March 2020 base at $0.5470. Conversely, bulls likely need to see a break of the 20-day EMA at $0.5723 to start turning the tide in their favour.
• NZD/USD 1-week vol. continued to soften, currently printing at 18.75%, off the recent cycle high at 21.61%.
• OIS indicates a terminal RBNZ rate of ~5.00%, up 10 bps from levels seen late yesterday.
• Domestically, we have the September manufacturing PMI due out shortly, the last print came in at 54.9.