The NZD has reacted favourably to an uptick....>

KIWI: The NZD has reacted favourably to an uptick in the RBNZ's 2-Year inflation

estimate, which printed at 2.11% (prev. 2.02%), although the 1-Year metric was

virtually unchanged. 

- The uptick in the 2-Year print, was perhaps a little surprising given the

glass half empty outlook given by the RBNZ last week, with growing murmurs

around the possibility of further monetary policy loosening emerging from some

quarters. Nevertheless, the NZDUSD topped 0.7300, while the antipodean cross

(AUDNZD) moved towards 1.0760. In isolation the print will do little to change

the RBNZ's outlook, but the Bank will no doubt welcome the fact that the release

didn't point to a further deterioration in inflationary pressure. The short end

is currently pricing a circa 50% chance of a 25bp hike from the RBNZ by year

end.