Retail Sales Beat Helps Further NZD Outperformance, BoJ Bond Buying Ops Coming Up

The outperformance from the NZD has continued in the first part of Thursday trade. There is a slightly offered USD tone elsewhere, but the BBDXY is only down a touch from end Wednesday levels, last near 1250.40.

• NZD/USD is back towards 0.6110 in recent dealings, up 0.20% versus end NY levels on Wednesday. Positive impetus from a Q1 retail sales beat (+0.5% versus -0.3% forecast). This doesn't change the broader narrative around weaker spending, particularly when taking into account population growth. However, it comes after yesterday's hawkish RBNZ hold and highlights spending was not as weak as feared.
• RBNZ Governor Orr has also been on the wires this morning. He noted the central bank was only likely to act "if we thought inflation expectations were getting away on us again" (per BBG).
• The AUD/NZD cross is to fresh lows last near 1.0840. This is sub the 100-day EMA, while the 200-day is back close to 1.0830.
• AUD/USD is a touch higher, last near 0.6625, while USD/JPY is close to Wednesday NY highs last near 156.80. Preliminary PMIs for Japan showed manufacturing moving back to expansion (50.5 versus 49.6 prior) for May. Services eased to 53.6 from 54.3.
• In the cross asset space, US yields are higher across the benchmarks, but gains are less than 1bps at this stage. US equity futures are higher, led by tech shares post the stronger than expected Nvidia result.
• Looking ahead we have Australian consumer inflation expectations coming in around 30mins. Shortly after that BoJ bond buying ops will be eyed given last week's cut back and rising onshore yields.