The USD is broadly stronger overnight against a backdrop of higher US interest rates and little fresh news on trade tensions. The Bloomberg dollar index is up around 0.5%, but remains well within its recent trading ranges.
The yen has outperformed amidst the modest pick-up in risk aversion (as reflected in lower equities) while the NZD and AUD are among the weakest currencies on the day.
NZ CPI was slightly stronger than expected on a quarterly basis, with the annual headline rate in line with consensus (and the RBNZ’s February forecast). The NZD initially jumped from around 0.7315 to above 0.7340 after the release, but quickly gave up those gains. We didn’t think there much in the CPI report to materially shift our expectations for monetary policy. The NZD has since declined to around 0.7265, around a two week low, in sympathy with the broader strength in the USD and decline in equities. RBNZ Governor Adrian Orr gave a wide ranging interview on radio before the CPI release but didn’t give much away about his policy intentions and there wasn’t much immediate market reaction.
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