GOLD: Gold Rises Further as Middle East Tensions Rise. 

In local morning trade, NZGBs are little changed despite a strong end to last week from US tsys.

• 2- and 10-year US tsys finished 5-6bps richer after a large miss in January retail sales (-0.9% M/M vs 0.7% prior, -0.2% consensus). It represented the biggest sequential drop in 22 months.
• A similarly weak "control group" figure led to a 0.5pp downgrade to the Atlanta Fed's GDP nowcast (to 2.3% GDP growth in Q1, i.e. no acceleration from Q4).
• This week’s US data schedule is relatively light, partly due to today’s Presidents Day holiday.
• NZ performance of services index rose to 50.4 in January from a revised 48.1 in December. "The PSI is consistent with stabilization rather than elevation, but its latest move upwards is encouraging”: BNZ
• NZ net migration showed a net gain of 27,092 people in the year ended Dec 31 — the lowest since December 2022. The gain follows a revised 30,322 increase in the year through November.
• Swap rates are flat to 2bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed. 48bps of easing is priced for February, with a cumulative 116bps by November 2025.

USD/JPY lows on Friday got close to 152.00, as broader USD sentiment continued to falter. The pair tracks near 152.20/25 in early Monday dealings, after rising a bit over 0.30% for Friday's session. broader USD indices were lower, the BBDXY off 0.30%, the DXY slumping 0.56%, as weaker US retail sales saw US Tsy yields lower. 

• For USD/JPY technicals, key support and the bear trigger is unchanged at 150.93, the Feb 7 low. Clearance of this level would resume the bear cycle that started on Jan 10. On the topside, the 50-day EMA, at 154.44, remains intact for now. So, for now we still remain within recent important pivot points.
• Yen lagged broader USD trends last week, losing 0.60% against the USD (despite Thurs/Fri gains), the only G10 currency not to rise versus the USD.
• The US 10yr Tsy yield finished up under 4.48%, off 5bps, while the 2yr lost 5bps to 4.26%. The 10yr yield is still above earlier Feb lows sub 4.40%.
• This reflected a large miss in US January retail sales (-0.9% M/M vs 0.7% prior, -0.2% consensus), which represented the biggest sequential drop in 22 months.
• Japan is seeking an exemption from reciprocal tariffs (per NHK). This follows an earlier request for Japan to also be exempt from steel and aluminium tariffs.
• On the data front today we have Q4 GDP out. The market expects a 0.3% q/q reading, unchanged from Q3 last year. Business spending is expected to rebound, but consumer spending is forecast to dip.
• Note as well in the option expiry space for NY cut later: Y148.20($986mln), Y152.00-20($1.1bln). 

• NZD/USD closed 0.85% higher on Friday, breaking back above 0.5700 to finish the week at 0.5725, the highest weekly close since mid December.
• The close back above key resistance of 50-day EMA and 0.5700, the first time trading above the 50pday EMA since early October, signals a change in momentum, the RSI is at its highest levels for the year, while the MACD indictor is printing green bars. Key levels to watch include, resistance is 0.5763 (Dec 18 highs), while 0.5790 (100-Day EMA) become a target. To the downside, a hold above the 50-Day EMA at 0.5700 is important, a break here would open a move to 0.5668 (20-day EMA)
• The RBNZ Shadow Board recommends a 50bps OCR cut this week, citing contained inflation, weak economic activity, and a soft labor market, according to NZIER. Members see the OCR at 2.75%-3.5% in a year, advocating a cautious pace of easing. Some expressed concerns over inflationary risks from US fiscal and trade policies and a weaker NZD, while two members favored faster cuts due to weak domestic conditions.
• RBNZ dated OIS is pricing in a 90% chance of a 50bps cut this week, with another 25bps fully priced for April and a cumulative 115bps of cut through to November 2025
• No large nearby strikes Mon. Upcoming notable strikes: 0.5450 (NZD1.71b Feb. 19), 0.5800 (NZD864.8m Feb. 19), 0.5650 (NZD525m Feb. 19)
• Nothing else on the calendar today, focus will turn to Wednesday when we get PPI input/output and the RBNZ rate decision