Credit Agricole FX Notes on Outperformer and Underperformer - FJElite

JPY
The yen modestly outperformed overnight after a Japanese minister pushed back on reports that the government wanted to keep rates low, which helped offset softer May wage growth. Real wages still remained comfortably positive, and although USD/JPY moved back below 162, that did not drag on the broader dollar, which was instead supported a little by safe-haven demand as global equities struggled and tensions around the Strait of Hormuz picked up again. Even so, the impact on oil has been limited so far.

NZD
The main event ahead is the RBNZ. Markets are leaning too heavily toward a 25bp hike, with around a 70% chance priced, but the better read is that this may again be a very close split decision. Lower oil prices, easing cost pressures, and a smaller share of firms willing to pass on higher costs give internal MPC members a case to stay on hold, while external members are still likely to favour a hike. That points to another tied vote, with Governor Breman potentially again breaking it in favour of no change. A hold would likely push NZD lower initially, but the downside may be limited if the rhetoric stays hawkish and markets view it as only a short delay to eventual tightening. On the Australia side, Sarah Hunter’s speech will also matter, especially for any comments on the weakening housing market, though the broader expectation is that she will reinforce the RBA’s still-hawkish tone.