Risk-Off Sentiment Clips Kiwi's Wings

Risk-off sentiment inspired by the spread of the Delta variant, NZD/USD retreated Thursday. Defensive mood allowed the pair to probe the water under Jul 2 low of $0.6948 and close just above that level.

• Next week's highlights include card spending (Monday), food price index (Tuesday), RBNZ Monetary Policy Review (Wednesday) as well as BusinessNZ M'fing PMI & CPI (Friday). Meanwhile, Chinese inflation data may provide some interest today.
• NZD/USD 1-week implied volatility (last +0.25pp at 11.31%) rose sharply over the last three days, reaching levels not seen since late March. The upswing in implied volatility occurred ahead of next week's RBNZ meeting and in the wake of the upbeat NZIER QSBO released last Tuesday.
• Spot NZD/USD last deals at $0.6946, 10 pips lower on the day, with the kiwi underperforming its G10 peers. Bears set their sights on the lower 1.0% 10-DMA envelope/Jun 18 low at $0.6927/23. Bulls look for a recovery of $0.7105, which represents the high print of Jul 6.
• A survey commissioned by the DPMC suggested that more than half of Kiwis are worried about opening New Zealand's borders
• New Zealand's heavy traffic gauge compiled by ANZ rose 1.2% M/M in June after a 6.2% decline in May, with accompanying commentary noting that "in the big picture, the traffic data certainly portrays a very busy economy."