KRW: 1 Month NDF Close To Recent Highs, Unemployment Rate, Rhee Speech Today

Aussie underperformed the G10 falling 0.3% against the greenback to 0.6603 after outperforming on Thursday. The pair has started today’s trading around this level. The USD index finished 0.1% higher on the back of higher yields following a pickup in University of Michigan 1-year ahead inflation expectations. AUDUSD broke below 66c several times but only briefly and seems to have found support at this level.

• The break above 0.6587 highlighted the resumption of the bull leg and opened 0.6668, key resistance. Initial support is at 0.6538, 50-day EMA, and resistance at 0.6647, May 3 high.
• AUDJPY finished down slightly at 102.87 after range trading on Friday. It is currently around 102.86. AUDNZD reached a high of 1.0991 but then eased to 1.0968, close to where it is now. AUDEUR fell 0.1% to 0.6132 and AUDGBP finished down 0.3% to 0.5272.
• Equities were stronger with the S&P up 0.2% and the Euro stoxx +0.6%. Oil prices were lower with Brent falling 1.3% to $82.58/bbl. LME metal prices rose 0.2% to be up 0.7%. Iron ore is around $115.50/t.
• Today the April NAB business survey and CBA household spending indicator print.

US banks Goldman Sachs and J.P. Morgan look for more policy support post the weekend's disappointing credit data update. See below for more details.

Goldman Sachs: "April's money and credit data all came in notably below expectations. Total social financing (TSF) flows turned negative in April, the first time since October 2005, thanks to a combination of weak loan demand and slow pace of bond issuance. The composition of RMB loan data showed weak credit demand. Household loans contracted in April, and corporate loans expanded mainly due to a surge in bill financing. The broad weakness in money and credit data likely reflects 1) the focus of policymakers on optimizing the structure and effectiveness of loan extension; 2) more stringent measures to tackle "idle money circulation" in the financial system (e.g., corporates' borrowing for redeposits); 3) deposit outflows from banks to financial markets (particularly the bond market). Looking ahead, we expect government bond issuance to pick up in late Q2, and the PBOC to facilitate the government bond issuance by increasing interbank liquidity. We continue to forecast one 25bp RRR cut in Q2."

J.P. Morgan: "The slowdown in April credit growth has been rather broad-based, led by contraction in household loans (amid lingering weakness in home sales and consumer spending). Corporate loans came in soft, suggesting cautious corporate sentiments on investment outlook (other than sectors of policy support), while corporate bond issuance also moderated notably. On the fiscal side, net government bond issuance showed the first monthly contraction since late 2018. In the broad picture, it is concerning that policy-makers may have become somewhat complacent on the growth outlook after the strong 1Q GDP report. The disappointing April credit report reinforces importance of maintaining growth-supportive macro policy going ahead (to avoid a repeat of the sudden loss of growth momentum as happened this time last year). On the monetary side, our baseline forecasts look for the next policy rate cut in June. In view of the disappointing April credit data, and considering the generally weak pricing environment, the possibility of an earlier rate cut in May cannot be ruled out."