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RBNZ’s surprise hold in cash rate sent NZDUSD down to lows of 0.6870, however the pair has since retraced losses to trade higher at 0.6932 after market digested the hawkish economic projections and statement which suggest RBNZ will tighten monetary policy soon. Post meeting, local banks have started calling for a rate hike in October and November consecutively.

Outside the action in Antipodeans, USD was mostly better offered against G10 and Asia FX. There are reversals in crowded long USD Asia trades, specifically in long USDKRW and USDTHB with both pairs retracing. KRW strengthened 70bps this morning after Finance Minister said recent decline in KRW looked excessive and likely at back of locals smoothing.

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The Reserve Bank of New Zealand decided to keep OCR at 0.25% and said the decision was made in light of the lockdown. NZDUSD got smacked to 0.6868. Profit taking was seen at 0.6870 from a sovereign name. Further reading into the RBNZ headlines showed new OCR projections have interest rates at 2% in Dec 2023 as versus 1.5% previously. One author said this is a hawkish hold and should limit the NZDUSD downside.

It was all about AUDNZD, the initial reaction was sell-off, we got to 1.0543 before settling at 1.0490. RBNZ decision saw the AUDUSD printing 0.7238 and then reversed back to 0.7266. NSW has recorded 633 new Covid cases today. PM Morrison said NSW recorded its highest day of cases ever, Victoria, ACT and NT are in lockdown, and the country is in a tunnel but people getting vaccinated are the rays of light.

At about 6.22 am Hong Kong this morning, EURUSD got down to 1.1701, we didn’t see much on the bid – suspect they were ice berg. There should be an option barrier at 1.1700. I do know about EUR1.9bn of 1.1700 strikes and EUR1.95bn of 1.1750 strikes maturing tomorrow. The Euro did recover off the low, Japanese bought EURJPY I guess.