Retail Sales Shrink Less Than Expected

In Monday's NY hours, NZD/USD was driven by the market reaction to Pres Biden's decision to nominate Jerome Powell for second term as Fed Chair. The rate sank amid broad-based demand for the greenback, hitting worst levels since Oct 13.

• New Zealand's retail sales ex inflation shrank 8.1% Q/Q in the three months through September, beating Bloomberg median estimate of a 10.5% contraction. The overall decline was largely influenced by a record fall in Auckland. New Zealand's largest city contributed 78% to the drop in total sales value, owing to a prolonged lockdown which will only be lifted next week.
• This was the final data release ahead of tomorrow's monetary policy decision, press conference and updated MPS from the RBNZ. The Reserve Bank are all but certain to raise the OCR and while a 25bp hike remains the base case scenario, the OIS strip prices a ~34% chance of a 50-pointer.
• NZD/USD overnight implied volatility has surged this morning, hitting levels not seen since the FOMC monetary policy meeting earlier this month. It last sits at 16.90%.
• Spot NZD/USD last trades at $0.6954, little changed on the day. Bears see Oct 11 low/round figure of $0.6904/00 as their initial target, followed by $0.6860, which limited losses on Sep 29 & 30. Conversely, bulls would be pleased by a jump above the 50-DMA/Nov 18 high at $0.7048/53, which would open up Nov 15 high of $0.7081.