STIR: RBNZ Dated OIS Pricing Modestly Firmer Than Pre-RBNZ Decision Levels

Oil prices fell on Monday following news that the Trump administration doesn’t intend to implement tariffs immediately but will study various trade policies. A confirmed plan to increase in US crude production at the inauguration and the start of the Gaza ceasefire also weighed. The USD index fell 1.1%.

• WTI is down 1.3% to $76.37/bbl following a trough of $75.82, below initial support at $76.16. The benchmark is still 7.2% higher in January. Key resistance is at $79.48.
• Brent fell 1.2% to $79.86/bbl after an intraday low of $79.42. It is now up 7% on the month. It remains in an uptrend though with key resistance at $79.50. Initial support is at $79.62 with key support at $77.44, 20-day EMA.
• The Trump administration has begun and the President has said he will fill the SPR “right to the top” after it was run down by President Biden following Russia’s invasion of Ukraine. It is over 300mn barrels below capacity. He also said that American energy will be exported “all over the world” and that he would bring down domestic prices.
• Canada is a large oil exporter to the US and Trump has said that its crude won’t be exempted from tariffs. There is some relief that trade restrictions aren’t imminent, opening the possibility of negotiations.
• The Iran-backed Houthis have said they will stop attacking US and UK ships in the Red Sea due to the start of the Gaza ceasefire. Israeli ships will remain targets. 

USD/CNH fell over 1% for Monday's session. We track near 7.2600 in early Tuesday dealings, levels last seen in the first half of Dec 2024. Sentiment was aided by no early tariff announcements from the returning Trump administration. Broader USD indices lost over 1%. 

• Onshore USD/CNY spot fell back to 7.2731, leaving a negative USD/CNH-USD/CNY bias, so we could see more downside for spot today. the CNY CFEST basket tracker edged up 0.11% to 101.46, but remains within recent ranges.
• The Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. Trump officials later corroborated the reports. It was also reported that China would be investigated around trade policies and whether it adhered to the trade deal the previous Trump administration enacted with China (see this BBG link).
• For USD/CNH technicals, we are back sub the 50-day EMA (after breaking below the 20-day yesterday). The 100-day is around 7.2466 in terms of further downside targets, the 200-day is close to 7.2210. The 50-day is back higher, close to 7.2875.
• Focus will rest on US-China relations, with CNH to remain very sensitive to any tariff related sentiment and any shift in Trump's position. Broader macro developments such as elevated US-CH yields and still positive US growth momentum could help keep USD/CNH dips supported, but further positioning adjustments may occur in the near term, with the near term tariff threat seemingly lowered.  
• The local data calendar is empty today. 

In local morning trade, NZGBs are 3bps richer across benchmarks. Due to Martin Luther King Day, there was no cash US tsy trading yesterday but futures were stronger.

• Swap rates are 2bps lower.
• NZ’s Performance of Services Index fell 1.2% m/m to 47.9 in December.
• NZ Retail Card Spending rose 2% m/m in December versus a revised +0.1% in November.
• However, the week's focus will be tomorrow’s Q4 CPI data which is forecast to show moderation in headline and non-tradeables inflation.
• Headline returned to the RBNZ’s 1-3% band in Q3 and is expected to ease 0.1pp to 2.1% y/y, posting a 0.5% q/q rise in Q4. The RBNZ forecasted 0.4% q/q & 2.1% y/y in November. Non-tradeables are projected to rise 0.8% q/q, resulting in the annual rate moderating to around 4.7% y/y from 4.9%.
• November net migration prints on Thursday. Initial readings have tended to be revised down over H2 2024 as immigration slows. The softening labour market has discouraged people moving to NZ and encouraged New Zealanders to shift to Australia.
• RBNZ dated OIS pricing is little changed. 45bps of easing is priced for February, with a cumulative 106bps by November 2025.