NZD nears six-week lows ahead of RBNZ at 2:00pm NZST
The NZ dollar was the biggest loser overnight, with NZD/USD down 0.6% ahead of today’s Reserve Bank of New Zealand decision. The pair is now near six-week lows.
In other markets, the USD was mostly stronger. GBP/USD fell 0.4%, EUR/USD slipped 0.1%, and AUD/USD edged 0.1% lower.
While the RBNZ is expected to keep rates on hold at 2.25%, the overnight move contrasts with market expectations that rising inflation will prompt the central bank to resume rate hikes relatively soon.
The RBNZ decision is due at 2.00pm NZST (12.00pm AEST).
Financial markets currently price a 53% chance of a hike at the RBNZ’s 8 July meeting.
Australia’s inflation puzzle keeps AUD on edge
Australian April inflation figures are due at 11.30am AEST.
We expect headline CPI to print at 4.4% y/y in April, down slightly from 4.6% in March. However, business surveys paint a hotter picture — price pressures appear to have intensified last month, pointing to inflation closer to 5% y/y.
The gap reflects deep uncertainty around how quickly, how often, and how broadly firms are passing through costs linked to the Middle East supply shock.
AUD/USD was broadly steady overnight and is currently about 1.6% below its 6 May high of 0.7278. On the downside, initial support sits at the 21-day moving average of 0.7165, followed by the 50-day moving average near 0.7119 if momentum weakens further.
On the upside, the pair must break above 0.7278 to extend gains.
Futures price a ~52% chance of an August hike (with OIS slightly higher), which may continue to underpin AUD/USD if the relationship holds.
USD mostly stronger as Doha talks keep Hormuz in focus
Iran’s chief negotiator and foreign minister met with Qatar’s prime minister in Doha to explore the shape of a potential US-brokered agreement.
Discussions covered the Strait of Hormuz, Iran’s highly enriched uranium stockpile, and the possible release of frozen Iranian funds.
Neither Washington nor Tehran is signalling an imminent breakthrough, and a range of unresolved issues — including sanctions, Lebanon-related tensions, and broader regional disputes — continues to narrow the path forward. Reports that the US conducted defensive strikes on targets in southern Iran on Monday highlight how fragile the diplomatic track remains.
In Asia FX, USD/JPY rose 0.2%.
USD/SGD gained 0.1% and is trading roughly 1.5% above its 28 January low of 1.2586. Immediate resistance sits at the 21-day moving average of 1.2763, closely followed by the 50-day moving average at 1.2762.
The chart suggests USD/SGD has retraced around 66% of its one-month range, indicating potential value for USD buyers at current levels. USD/CNH climbed from three-year lows.
RBNZ hit ahead of RBNZ
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 29 May
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
