Return Of Covid Jitters Clips Kiwi's Wings

Selling pressure hit the kiwi after New Zealand reported a spike in daily Covid-19 case count. Officials detected 45 new infections, the most since September 2, after recording just 8 yesterday. This resulted in some dovish RBNZ repricing, with the OIS strip pricing an ~81% chance of a 25bp OCR hike when the MPC convene next week, down 9pp from what was seen before headlines surrounding New Zealand's Covid-19 caseload hit the wires.

• The NZD remained the worst G10 performer, while NZD/USD probed the water below the 61.8% retracement of its Aug - Sep rally, as it registered a fresh one-month low.
• NZD/USD 1-week implied volatility spiked higher, reaching levels not seen since July 9. It last sits at 11.15%, with participants assessing RBNZ outlook ahead of next Wednesday's monetary policy meeting.
• AUD/NZD caught a bid and BBG cited a trader source pointing to the trimming of existing short positions following the release of New Zealand's latest Covid-19 case count. The rate narrowed in on its 50-DMA, while AUD topped the G10 scoreboard.
• Most G10 crosses were happy to tread water, while the DXY ground away from a multi-month peak reached yesterday. USD/JPY touched its highest point since Mar 26, 2020 before erasing gains, with Japan watchers awaiting the outcome of ruling party leadership contest.
• There is central bank speak galore to digest today, with several notable appearances due as part of the ECB's annual Forum on Central Banking, including a panel discussion with Fed, ECB, BoE & BoJ chiefs.