The old saying in the market is that if something can't go up on good news, then..
That might very well be the case for the kiwi as it is feeding off risk tones more so than the hawkish RBNZ from earlier today. In case you missed it, the central bank moved to hike rates by 50 bps as expected but provided some hawkish undertones in its messaging.
For one, they revised higher their OCR track by 30 bps to 3.70% by the end of this year and sees the terminal rate at 4.10% as opposed to 3.95% previously. They also made mention that:
“Core consumer price inflation remains too high and labour resources remain scarce.”
The fact that they are stressing on inflation being "too high" pretty much says that they are going to keep up with the aggressiveness. As such, no subtle shifts from the RBNZ just yet (unlike what we have seen from the Fed, RBA, and BOE).
That said, all of this is still not enough to lift the kiwi as NZD/USD has seen its earlier advance erased and is now falling to the lows for the day as risk sentiment remains on edge. Higher bond yields look to be biting at equities as S&P 500 futures are down 0.4% on the day and European indices are also marginally lower, weighing on the risk mood.
For NZD/USD, price is now testing the 38.2 Fib retracement level at 0.6312 with trendline support (white line) holding nearby at 0.6292 before dropping towards the 50.0 Fib retracement level at 0.6264. Those are key levels to watch in order to see if buyers are to make a stand but the fact that even a more hawkish RBNZ isn't cutting it is rather ominous.
However, there might be some good news as the focus will soon shift towards dollar sentiment instead with the US retail sales and FOMC meeting minutes coming up later today. But that could also work against the kiwi if the releases signal a more bullish sentiment for the greenback to close out the week.
