USD Weaker; NZD Outperforms

USD sentiment remains on the back foot, sitting weaker against all the majors, while NZD and AUD are seeing outperformance.

• NZD/USD rose more than 1% today, getting close to 0.6470 before settling back at 0.6450. Higher US equity futures has improved risk appetite, with mixed readings in Asian markets not impacting sentiment at this stage.
• The RBNZ is main event risk this week in NZ, with the market expecting a 50bps hike, which supported by the RBNZ Shadow Board view. NZ 2yr swap rates are around 5bps higher on the day. A 50bps hike is close to fully priced for this week's meeting.
• The AUD has been dragged higher by NZD performance, although has unperformed modestly. AUD/USD is back at 0.7090, +0.70% higher on the day, while the AUD/NZD cross is back sub 1.1000. With the election now behind us and solid chance of Labor holding a small outright majority, tail risk around political uncertainty has been removed for the AUD.
• Elsewhere, the USD remains on the backfoot. US yields are higher on the day, but the differentials with the majors fell sharply last week. EUR/USD is back close to the 1.0600 handle, while USD/JPY is down through 1.2750. GBP/USD back towards 1.2550.
• On the data front, German Ifo Survey will take focus after Asia hours. Comments from ECB's de Cos, Holzmann, Nagel & Villeroy, Fed's Bostic & BoE's Bailey are on tap.