Robertson To Deliver Budget On May 20, RBNZ Misses LSAP Buying Target

NZD/USD crumbled Tuesday on the back of NZ government's tinkering with housing market regulations in a bid to arrest the surge in home prices. The rate dived through several key support levels and has a brief look under the psychological $0.7000 level late in the day. Broader risk-off environment caused by the tightening of Covid-19 restrictions in Europe, Fed Chair Powell's attempt to downplay unwanted inflation risk and a softer commodity complex aggravated the kiwi's plight.

• NZ 5-year interest rate swap dived in reaction to the gov't's measures vs. housing bubble. It has extended losses today, crossing below 1.0000%, and last sits at 0.9550%, the lowest level since Feb 23.
• New Zealand revealed that the 2021 Budget will be delivered on May 20. FinMin Robertson said in a statement that he will focus on "making sure spending is targeted at the areas and people that need it the most."
• NZ Feb trade surplus came in at NZ$181mn, matching expectations.
• NZDM flagged a lighter issuance schedule for Apr, noting that it plans to offer NZ$1.65bn of NZGBs at five auctions.
• NZD/USD has erased its initial gains and last trades -4 pips at $0.6995. The recent ~15 pip downswing seems like a function of a round of broader risk-off flows, albeit it is worth noting that a miss in RBNZ LSAP ops delivered a blow to local bond yields.
• The rate rests upon support from the 23.6% retracement of the Mar 19, 2020 - Feb 25, 2021 rally/yesterday's low at $0.6994/90 and a break here would open up the 200-DMA at $0.6867. Bulls look for a rebound above Mar 5 low of $0.7100 & the 100-DMA at $0.7126.
• There is little of note on NZ docket during the remainder of this week, an update on non-resident bond holdings comes out Thursday.