NZD: NZD/USD - Poor GDP Data Reasserts NZD Underperformance
The NZD/USD had a range overnight of 0.5872 - 0.5917, Asia is trading around 0.5885. US stocks did what they do best and made new highs as US yields bounced off their lows. This saw the USD get some welcome relief though time will tell how long the reprieve lasts. The NZD underperformance got a real nudge from the poor GDP data. While the USD continues to pullback the NZD/USD is a great vehicle to express that but when the USD sellers return the NZD underperformance will once again be best expressed in the crosses. US Futures have opened slightly higher this morning, E-minis +0.15%, NQU5 +0.10%.
- The 0.5800 area is important support, a sustained break through there would turn the focus back towards the 0.5500 lows.
- Bloomberg - “Kiwibank Urges ‘Serious Discussion’ on RBNZ Cutting Rates to 2%. There should be a “serious discussion” about reducing the Official Cash Rate to 2% from 3% currently, Kiwibank Chief Economist Jarrod Kerr told the Herald NOW news service.”
- “Dollar Rally Fueled by Yield Spike Faces Short Shelf Life. The dollar’s jolt back to life is being fueled by a reversion in US yields, but there are serious risks that the rally is not sustainable.” - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6020(NZD 374m Sept 22), 0.5900(NZD372m Sept24) - BBG
- Data/Event: August trade data are published today. The improvement in the deficit stalled around mid-year.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW 1.3tn 3-Year Bonds
- Hong Kong to Sell HK$500mn 3.99% 2045 Bonds
- Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
- Vietnam To Sell VND 1.0Tln 2030 Bonds; (TD2530010)
- Vietnam To Sell VND 7.5Tln 2035 Bonds; (TD2535028)
- Vietnam To Sell VND 3.0Tln 2040 Bonds; (TD2540037)
- Bank Indonesia to Sell 94D SUVBI Bills
- Bank Indonesia to Sell 31D SUVBI Bills
- Bank Indonesia to Sell 185D SUVBI Bills
- Bank Indonesia to Sell 367D SUVBI Bills
- Bank Indonesia to Sell 273D SUVBI Bills
- China to Sell CNY125bn 2030 Bonds
- China to Sell CNY30bn 91-Day Bills
- India to Sell INR60bn 182-Day Bills
- India to Sell INR50bn 364-Day Bills
- India to Sell INR100bn 91-Day Bills on Aug. 20
ASIA: Coming Up in Asia Today
| 0200GMT | 0900HKT | 1100AEDT | CHINA 1-Year Loan Prime Rate |
| 0200GMT | 0900HKT | 1100AEDT | CHINA 5-Year Loan Prime Rate |
| 0820GMT | 1520HKT | 1720AEDT | Indonesia BI-Rate |
| 0900GMT | 1600HKT | 1800AEDT | Taiwan Export Orders YoY JULY |
| 0920GMT | 1620HKT | 1820AEDT | Taiwan BoP Current Account Balance 2Q |
| 1230GMT | 1930HKT | 2130AEDT | India Eight Infrastructure Industries JULY |
source: Bloomberg Finance LP / MNI
NZD: NZD/USD - Drifts Lower Probing Below 0.5900, Awaits RBNZ
The NZD/USD had a range overnight of 0.5891 - 0.5931, Asia is trading around 0.5895. US equities saw some profit-taking heading into Jackson Hole led by big Tech, this saw risk sensitive currencies like the AUD and NZD trade heavy. This combined with a market that is also reducing USD shorts going into the meeting saw the antipodeans drift lower. The NZD/USD is probing below 0.5900 and is eyeing its big support area around 0.5800/0.5850. The risks are slightly skewed to more USD upside as positions are lightened heading into Jackson Hole but would not expect any significant breaks until the market has heard what Powell has to say. Risk has opened muted this morning, E-minis +0.01%, NQU5 +0.01%. RBNZ today will provide another input.
- MNI RBNZ Preview-August 2025: Rate Cut, Focus On OCR Path. The RBNZ meets today and is likely to cut rates 25bp to 3.0%, the mid-point of its estimated "neutral" range. While it paused at the July meeting, it was with a clear easing bias.
- With the cut widely forecast, attention will be on the revised RBNZ outlook and tone of the statement and press conference. The focus is likely to be on the projected OCR path and whether it is revised lower suggesting further easing towards stimulatory territory as excess capacity persists.
- With the focus on the medium-term, the 2026 and beyond inflation forecasts will be the important ones and should remain around the 2% band mid-point.
- RBNZ-dated OIS pricing is slightly firmer across meetings with 23bps of easing priced for tomorrow’s meeting, with a cumulative 41bps by November 2025.
- Whole Milk Prices Edge Higher At Latest Auction : Overnight the whole milk powder auction (held around 2 times per month) saw average prices rise 0.3% to $4036. Whole milk powder prices are up from recent lows but still around 7.7% off 2025 highs (albeit presenting a supportive backdrop for NZ's terms of trade).
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5925(NZD400m), 0.5950(NZD320m). Upcoming Close Strikes : 0.5980(NZD660m Aug 21). - BBG
- Data/Event : RBNZ Cash Rate
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
