The Kiwi was unable to sustain yesterday’s post-RBNZ bounce. But as economists at ANZ Bank note, NZ has the highest cash rate in the G10 again; that’s good for carry.

Carry is back

“It isn’t something local that pulled it back; rather it was a rebound in the Dollar and likely safe-haven buying going into the long weekend. We say that because US bond yields slumped further and data there slowed, but the USD DXY still bounced.” 

“Local recession fears have lifted following the RBNZ’s 50-pointer yesterday, but equally, stern action should stem any lingering inflation concerns. That’s a less straightforward picture for the Kiwi, but carry is back, and NZ now has the highest G10 cash rate once more.”