NZD slips despite Q1 growth beat- BBH

NZD is underperforming across the board. Financing New Zealand's large current account deficit (-5.7% of GDP in Q1) is more difficult during periods of global risk aversion when foreign capital flows tend to dry up, BBH FX analysts report.

RBNZ holds steady as data improves

"New Zealand Q1 GDP growth overshot expectations. Real GDP increased 0.8% q/q vs. 0.5% in Q4. Consensus had 0.7% penciled-in while the RBNZ's GDP model implied growth of 0.6%. Growth in Q1 was driven by business services and manufacturing."

"The improvement in New Zealand economic activity supports the RBNZ's stance that the easing cycle is on hold. Governor Christian Hawkesby stressed recently that "when we next meet in July a further cut in the OCR is not a done deal."

"We're really more in a phase where we are taking considered steps, data dependent." The swaps market implies 17% odds of a rate cut at the next July 9 meeting and 25bps of total easing over the next 12 months for the policy rate to bottom at 3.00%."