🥝NZD Favoured By Carry, Pressured By Momentum: Cable FX Macro

• New Zealand's Q2 GDP growth disappointed (below expectations), alongside a contracting services sector and Business NZ PMI at 49.9 (indicating contraction). Westpac Consumer Confidence dipped slightly to 90.9 in Q3, signaling subdued household spending. Inflation expectations rose to 4.7%, the highest since July 2023, potentially due to global tariff talks, but this hasn't offset broader weakness. The current account deficit improved to -$0.97B (better than forecasted -$2.7B), providing minor relief.

• The market presently estimates a 32% probability that the RBNZ will reduce rates by 50bps at its upcoming meeting on October 8. In comparison, the AUD's relative pricing appears less aggressive, following the release of employment data last night.

• In September, the kiwi is positioned in the middle of the range within the G10FX Composite model. It is bolstered by the carry factor but is currently impacted by momentum. This month, the momentum factor is outperforming all other strategies.

• Stochastics and RSI are now flashing stretched, as the AUD/NZD cross broke above technical resistance to reach the highest level since 2022.