Under Pressure

Risk-off impulse has generated headwinds for the kiwi dollar, as the GDP week gets underway. Weekend updates on China's COVID-19 situation brought no reprieve, as Beijing conceded that an outbreak linked to a popular bar is proving difficult to control, while Shanghai suspended dine-in services and punished several local officials for missteps in implementing quarantine measures. Regional catch-up to expectation-beating inflation data released out of the U.S. Friday is adding pressure to riskier currencies.

• NZGBs went offered as cash trade re-opened, with 10-year yield topping 4.0% for the first time since 2014, as the space took its cue from Friday's post-CPI slump in U.S. Treasuries.
• Reminder that Australian financial markets are closed in observance of a public holiday, which may limit liquidity in the region.
• NZD/USD changes hands at $0.6347, down 25 pips on the day. From a technical point of view, the next layer of support is located at $0.6291, which represents the low print of May 18. Bulls need a rebound above Jun 3 high of $0.6576 to regain poise.
• NZD/USD implied volatilities have rallied across the curve ahead of this week's NZ GDP data & U.S. FOMC's monetary policy decision. The 1-week tenor sits at its best levels in three weeks.
• New Zealand's Q1 BoP current account balance will hit the wires Wednesday, before the release of Q1 GDP on Thursday. Friday's publication of May BusinessNZ M'fing PMI will top off the local data docket this week.