NZD Rallies On Hawkish RBNZ Repricing

The repricing of future OCR path pushed the kiwi higher, as an upbeat NZIER Quarterly Survey of Business Opinion helped build RBNZ rate hike bets. The survey revealed a sharp improvement in business confidence and demand, combined with intensifying inflation pressures. The kiwi's rally accelerated after ASB and BNZ both revised their RBNZ calls and said that they now expect the tightening cycle to begin in November this year.

• NZD/USD surged past its 200-DMA, which limited gains in early Asia-Pac trade. AUD/NZD plunged to its lowest point in more than a month, albeit a BBG trader source flagged demand from short-term accounts looking to buy AUD on dips ahead of the RBA's policy announcement. A degree of spillover from kiwi strength provided further support to the Aussie.
• The greenback went offered across the board before U.S. markets reopen after the Independence Day. USD/JPY extended losses, but struggled to make any substantial headway beyond yesterday's low. Worth flagging that $2.2bn of USD/JPY options with strikes at Y111.00 expire at today's NY cut.
• GBP remained buoyant after PM Johnson confirmed that the UK was poised to ditch most Covid-19 rules on Jul 19.
• The RBA's latest monetary policy decision, German ZEW survey & factory orders, U.S. ISM Services, EZ retail sales and ECB speak from de Guindos, de Cos & Visco take focus from here.