NZD: Kiwi Rangebound, NZ Consumer Confidence Erodes
NZD/USD struggled for a clear direction Thursday, which was an inside day for the pair. A notable upswing in USD/CNH likely kept a lid on the kiwi.
- When this is being typed, NZD/USD trades flat at $0.6480. A break above May 25 high of $0.6514 would bring May 5 high of $0.6568 into play. Conversely, bears look for losses past May 18 low of $0.6291, before setting their sights on May 12 low of $0.6217.
- The White House confirmed that U.S. President Biden will meet New Zealand's PM Ardern next week. She is currently in the U.S., leading New Zealand's trade and tourism delegation.
- New Zealand's ANZ Consumer Confidence fell to 82.3 this month from 84.4 prior, which is "still dire." According to ANZ, the "proportion of people who believe it is a good time to buy a major household item, the best indicator for spending, fell 7 points to -30." On the other hand, "inflation expectations fell from 5.6% to 5.1%."
- Next week's data highlights include building permits & ANZ Business Confidence (Tuesday), CoreLogic House Price Index (Wednesday), terms of trade (Thursday), volume of all buildings (Friday).
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AUSSIE 10-YEAR TECHS: (M2) Bounces Off Cycle Lows
- RES 3: 97.870 - High Mar 3
- RES 2: 97.455 - High Mar 18
- RES 1: 97.185 - High Apr 5
- PRICE: 96.935 @ 16:15 BST Apr 26
- SUP 1: 96.806 - 2.0% Lower Bollinger Band
- SUP 2: 96.785 - Low Apr 22
- SUP 3: 96.570 - 0.5% 10-dma envelope
Aussie 10y futures returned to cycle lows last week, retaining the sell-on-rallies theme, although prices have stabilised for now. The move lower exposes next support posted at the 2.0% Lower Bollinger Band at 96.821, ahead of a stronger area of support at the 0.5% 10-dma envelope - which crosses at 96.570 currently. Initial resistance is at a recent high of 97.185 on Apr 5.
NZD: Holding Steady After Continued Sell-Off
NZD/USD took another nosedive Tuesday, extending its current losing streak to four consecutive days. Unfavourable risk backdrop undermined the pair, even as the PBOC vowed increased policy support. While China central bank's statement soothed the nerves in Asia, risk appetite soured later in the day as concerns over China's Covid-19 situation & Russia's invasion of Ukraine returned to the fore.
- The pair printed its worst levels since the last day of January on Tuesday and last trades +2 pips at $0.6565, not too far from yesterday's low.
- From a technical point of view, the key near-term support is located at $0.6530, the low print of Jan 28. A break here would expose Sep 24, 2020/Aug 20, 2020 lows of $0.6512/0.6489. Bulls look for recovery towards Apr 20 high of $0.6813.
- In the absence of local data releases, Australian CPI will take focus today, with participants on the lookout for any trans-Tasman spillover.
- Looking further afield, New Zealand's trade data & ANZ Business Confidence will hit the wires on Thursday, with ANZ Consumer Confidence coming up Friday.
RBNZ: RBNZ Publishes Response To Feedback To Proposed Policy For DSRs On Mortgage Lending
The Reserve Bank of New Zealand publishes its response to feedback received on its proposed policy for debt serviceability restrictions (DSRs) on residential mortgage lending:
- “Our modelling indicates that first-home buyers would be the least impacted by a DTI restriction, with investors impacted the most as they tend to borrow at higher DTIs than other groups on average."
- “We intend to have the framework finalised by late 2022, so that restrictions could be introduced by mid-2023 if required.”
- "Banks’ test interest rates have begun to rise in line with market rates, and we expect to see a slowdown in high-DTI lending over the coming months."
- "We do not see an urgent need to impose an interim test rate floor at this stage, but we are monitoring the situation closely and do not rule out this option if there is a resurgence of risky lending in the housing market."
