Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Bank of Japan Governor Signals Accommodative Stance Amid Negative Real Rates 
J.P. Morgan Downgrades Essity AB on Rising Costs and Weak Earnings Outlook 
India's Central Bank Holds Rates Amid Iran War Energy Shock 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Morgan Stanley Warns Against Overestimating EV Demand Boost from Rising Oil Prices 
Uranium Bull Market Gains Momentum Amid Supply Deficits and Geopolitical Tensions 
Bank of Korea Governor Nominee Warns of Action if Korean Won Weakens Further 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Urban studies: Doing research when every city is different 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
On Valuation terms: NZD remains overvalued, while milk powder prices have stayed depressed and inflation in New Zealand has surprised to the downside.
NZD TWI strength is a major concern, together with downside risks to global growth. But TWI strength is not solely yield driven. Growth matters too and lowers interest rates are stimulating growth. The Canadian dollar offers better value, and should continue to benefit from more stable crude oil prices and the US economic recovery.
Disinflation: New Zealand is suffering from disinflationary pressures, with reported CPI inflation well below the RBNZ’s 1-3% target range. It is also more exposed to China growth risks than Canada.
Chinese trade exposure: New Zealand has a very export-driven competitive economy with exports accounting for about 30% of GDP.
Most notably, China has been the major trade partner of Kiwis, China overtook the United States at the end of 2008 to become New Zealand's second-largest trading partner, with bilateral trade amounting to $12.7 billion in the year ended September 2011. Chinese demand for New Zealand commodity exports, especially dairy products, and logs, has risen rapidly in recent times and has been the major factor in the recent surge in New Zealand's commodity prices and terms of trade.
OCR and Short End: Kiwis interest rates are high in a global comparison, we expect the RBNZ to cut the OCR by 25bps a piece in August and February, taking the OCR to 1.75%. This is more than fully priced, but even so, we expect the short end to remain under downward pressure as the market explores the possibility of deeper OCR cuts.
Recommendation: Short NZD/CAD is a relative value trade with low correlation to global market trends.
