NZD: Asia-Pac: NZD/USD Consolidates Around 0.5650
The NZD/USD had a range today of 0.5636 - 0.5651 in the Asia-Pac session, going into the London open trading around 0.5645, -0.05%. The NZD continues to trade heavy but I continue to be a little wary of positioning in the NZD though as the market is small and traders tend to very quickly become all positioned the same way. The NZD does stand out as a vehicle to express a short in but should this bout of improved risk sentiment grow it will be tough for the NZD to ignore it and it could play catch up to the move at some point, if you feel this bounce in risk will fail and move back lower then the NZD remains a great way to express that. I still suspect any decent bounce will again attract sellers though. The first sell area on a pullback would be around 0.5750 and then the more pivotal 0.5850 area.
- The AU-NZ 10-year yield differential stands at +30bps, its widest since October 2020.
- MNI AU - Inflation Expectations Stable, RBNZ On Track For November Cut. The RBNZ’s Q4 survey of expectations posted unchanged inflation expectations. The central bank is likely to be relieved that not only are they within its 1-3% target band but they didn’t increase in the latest reading following the rise in Q3 CPI to 3.0% y/y from 2.7%, although the RBNZ’s measure of core held steady at 2.7%. The RBNZ has maintained for some time that the Q3 increase would be temporary and its August projections showed inflation moderating from Q4 and approaching the band midpoint in 2026 given the degree of spare capacity in the economy.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5380(NZD460m Nov 13), 0.5600(NZD538m Nov12), 0.5800(NZD461m Nov 12) - BBG
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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Below is the week’s data schedule, with MNI’s annotation of whether or not data will be postponed.
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- As such next week we’ll be looking at some under-covered data points, including the Redbook weekly and Chicago Fed’s CARTS retail sales data (in lieu of the Census Bureau retail sales report), with a little more focus than usual on regional Fed manufacturing indices (NY, Philadelphia).
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