Mixed NZD performance in October
• A dovish 50bp cut by the RBNZ caused only temporary NZD weakness in October
• The USD was broadly stronger, and NZD/USD fell just over 1%; the NZD recovered from a mid-month malaise and ended mixed on the key crosses
• JPY underperformed on political uncertainty and the BoJ remaining on the sidelines; NZD/JPY rose 3%
Roasted Kiwi
• For a second consecutive month, the NZD was a clear underperformer, struggling after a poor Q2 GDP outturn
• By month-end, the market had priced in the OCR falling just below 2.25%, implying at least another 75bps of cuts
• NZD/USD fell 1.7%, with the NZD showing even larger falls on NZD/AUD and NZD/EUR crosses, to multi-year lows
RBNZ’s dovish pivot deals a blow to NZD in August
• Downward revision to US payrolls and Fed Chair Powell opening the door to a September easing supports risk appetite
• US rates lower and curve steeper; global equities power up to fresh record highs
• RBNZ also adopts a dovish pivot, driving down NZ rates; broad USD weakness, but NZD a laggard as NZ-global rate spreads fall