Risk Aversion Takes Wind Out Of Kiwi's Sails

NZD/USD failed to cling onto its initial gains inspired by hawkish RBNZ repricing and retreated ahead of Tuesday's WMR fix, as broader risk aversion took hold. The rate briefly showed above Jun 25 high/round figure resistance at $0.7095/0.7100, before a sharp pullback into negative territory. The kiwi still outperformed its high-beta G10 peers, all of which slumped on a softer commodity complex.

• The latest QV House Price Index showed that the average value rose 6.6% over the three months through Jun, which comes after an 8.8% growth recorded in May. QV General Manager said that "it's too early to say the market has turned, but this will be encouraging news for government officials and regulators, concerned about the financial risks of an overheated property market."
• The latest job ads figures from Trade Me showed that June saw the number of listings reach the highest point in the data series, which came alongside an uptick in average pay and a decline in the number of applicants. Persistent labour shortages were attributed to the absence of migrant workers.
• The local docket is fairly empty during the remainder of this week, which shifts focus to next week's quarterly CPI & RBNZ Monetary Policy Review. The RBNZ's communique will provide much interest after the release of a particularly upbeat NZIER QSBO, a known point of reference for the Reserve Bank.
• NZD/USD trades flat at $0.7011 as we type. A move through $0.6948, which limited losses on Jul 2, would shift focus to Jun 18 cycle low of $0.6923. Bulls look for a rally above yesterday's high of $0.7105, which would allow them to regain poise.