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USD Index Steady, NZD Surges On Hawkish RBNZ Hold Before Trimming Gains

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The BBDXY is little changed in the first part of Wednesday dealings, last around 1247.55. This has masked noticeable outperformance from the NZD, post a hawkish hold from the RBNZ.

  • The RBNZ revised the OCR track higher, along with the inflation outlook. We have seen a sharp rise in NZGB yields as a result (5-8bps, led by the front end).
  • NZD/USD got to highs of 0.6152 but we sit back around 0.6120/25 in recent dealings, still +0.50% firmer for the session. RBNZ Chief Economist Conway pushed back against market pricing of a Dec hike at the press conference. Still, Governor Orr noted raising rates at this meeting was a real consideration.
  • Upside focus for NZD is likely to rest at 0.6200/20 (round number, March 8 High). Note the 200-day EMA is back near 0.6075.
  • AUD/USD has been relatively steady, dragged higher by NZD but now back to flat at 0.6665. The AUD/NZD cross got to lows of 1.0861 (close to the 100-day EMA at 1.0857), but we sit slightly higher now, around 1.0880/85.
  • Trends have been relatively quiet elsewhere. USD/JPY has drifted higher but remains within Wednesday ranges. We were last 156.30/35.
  • In the cross asset space, US trends have been very steady in terms of equity futures and yields.
  • Looking ahead, Wednesday’s calendar is highlighted by UK inflation data and the FOMC minutes of the May meeting.
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The BBDXY is little changed in the first part of Wednesday dealings, last around 1247.55. This has masked noticeable outperformance from the NZD, post a hawkish hold from the RBNZ.

  • The RBNZ revised the OCR track higher, along with the inflation outlook. We have seen a sharp rise in NZGB yields as a result (5-8bps, led by the front end).
  • NZD/USD got to highs of 0.6152 but we sit back around 0.6120/25 in recent dealings, still +0.50% firmer for the session. RBNZ Chief Economist Conway pushed back against market pricing of a Dec hike at the press conference. Still, Governor Orr noted raising rates at this meeting was a real consideration.
  • Upside focus for NZD is likely to rest at 0.6200/20 (round number, March 8 High). Note the 200-day EMA is back near 0.6075.
  • AUD/USD has been relatively steady, dragged higher by NZD but now back to flat at 0.6665. The AUD/NZD cross got to lows of 1.0861 (close to the 100-day EMA at 1.0857), but we sit slightly higher now, around 1.0880/85.
  • Trends have been relatively quiet elsewhere. USD/JPY has drifted higher but remains within Wednesday ranges. We were last 156.30/35.
  • In the cross asset space, US trends have been very steady in terms of equity futures and yields.
  • Looking ahead, Wednesday’s calendar is highlighted by UK inflation data and the FOMC minutes of the May meeting.