AUD/NZD, EUR/USD: Pre-event squaring out of RBNZ; elsewhere still low vol despite backdrop
AUD/NZD reversing run out of last 2 sessions, though RBNZ was only catching up towards mkt pricing
Elsewhere, mkt continues to wait and hope on Iran, expiries could add to the lethargy
BoJ comments may back a hike, but month-end and backdrop dominate
Antipodeans the main movers overnight, with the RBNZ doing enough with the split vote to force some pre-event covering, AUD/NZD reversing its upside stretch of the last 2 sessions. It hasn’t done a huge amount of chart damage yet though and the upward revisions to the RBNZ central OCR projection path didn’t actually fully catch up with market pricing prior anyway, so the 'surprise' was more down to positioning.
Elsewhere, the market is doing its best to hold on to hopes of Iran progress, as talks continue despite the strikes and ‘ceasefire broken’ fallout yesterday. Clearly still big challenges to clear all the same for Trump to get a result he can at least pretend is a good deal given Iran redlines and the further bad faith lack of trust.
BoJ comments largely supportive of the notion of a hike at the next meeting, Ueda warns temporary energy shock could become persistent, Okuno says Japan’s financial conditions loose despite rising yields. June odds priced just under 70%. USD/JPY more focused on the broader global and dollar tone as well as possible month-end rebalancing support though for now.
EUR/USD holding 1.1640 and absent any big news could find itself held in the .40-50 zone into US hours into expiries.