SOUTH KOREA: NPS to Raise Stock Holding Target, Avoiding Selling Requirement

• The US dollar has edged higher through Tuesday’s European morning, fuelled by renewed uncertainty over peace talks in the Middle East, as Iran’s State TV have said an Iranian delegation has not yet been sent to Pakistan. The DXY has rallied through the overnight highs to print best levels of 98.31. Despite this, the daily change is just +0.15% as net adjustments across the G10 FX space remain broadly contained.
• AUDUSD continues to consolidate below the 0.7200 following fresh cycle highs on Friday, and is the worst performing major pair Tuesday, falling 0.32% to 0.7155. Conversely, the New Zealand dollar has been the main beneficiary on the session following the above-expectation NZ CPI data for Q1. Headline inflation rose 3.1% Y/y in the first quarter, with non-tradeables inflation increasing 1.1% Q/q, above the anticipated 0.9%.
• NZDUSD has rallied back above 0.59 as market participants assess inflationary pressures versus the pessimistic growth outlook in New Zealand, with recovery highs at 0.5929 the immediate topside level. After a brief test above 1.22 early in the session, AUDNZD fell just shy of the cycle highs at 1.2208. Subsequently, the cross has fallen roughly 80 pips, and is now down 0.5% as we approach the NY crossover.

Strong 3-year gilt auction of the 4.00% May-29 gilt with decent bid-to-cover despite the larger size, decent tail of 0.2bp, and the LAP (lowest accepted price) was decently above the pre-auction secondary market price.