FOREX: A$ Supported Despite Higher RBA Easing Odds, Steady Trends Elsewhere
Jan-08 04:28
Aggregate FX moves are very muted in the first part of Wednesday trade. The USD BBDXY index is little changed versus end Tuesday levels in NY, last near 1307.
- AUD/USD moved from above 0.6240 to 0.6212 post Nov CPI data. The data showed headline CPI pressures ticking up in y/y terms, but the RBA's preferred inflation measure, the trimmed mean, eased back to 3.2% y/y from 3.5% (closer to the top end of the RBA's target band). An RBA cut is more than fully priced for the April meeting and 64% for the February meeting.
- Follow through downside for the A$ hasn't materialized though, we sit back in the 0.6230/35 region now, little changed for the session. NZD/USD saw some negative spill over from the A$ dip, but likewise has been supported, the pair last near 0.5635.
- China and Hong Kong equities are down at the lunch time break, off 1.5-1.6%, with sentiment not boosted by details around the expanded consumer trade in appliance/motor vehicle program.
- US equity futures are up a little over 0.20%, which is perhaps providing some offset. In the US yield space, we have seen little net movement after Tuesday's yield bounce following better than expected data outcomes.
- USD/JPY has tracked recent ranges, with Tuesday's high above 158.40 holding, while dips sub 158.00 have been supported. EUR/USD is a touch higher, last near 1.0350.
- Later the Fed’s Waller speaks on the economic outlook and the December FOMC minutes are published. US jobless claims, December ADP employment and November consumer credit as well as November German orders & retail sales and December euro area European Commission survey print.
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AUSSIE BONDS: Slightly Richer Ahead Of RBA Policy Decision Tomorrow
Dec-09 04:23
ACGBs (YM +2.0 & XM +0.5) are holding stronger after dealing in narrow ranges on a data-light Sydney session.
- The domestic focus of this week will be tomorrow’s RBA decision and Thursday’s November jobs data after October disappointed. The cash rate is unanimously forecast to remain at 4.35% and so the guidance will be monitored closely for any changes. The RBA meeting will be followed by Governor Bullock’s press conference.
- Bloomberg consensus is again forecasting a 25k increase in employment in November with the unemployment rate rising 0.1pp to 4.2%. The RBA is projecting it to rise to 4.3% in Q4 2024.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. The focus is this week's CPI and PPI inflation data on Wednesday and Thursday respectively.
- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +6bps.
- Swap rates are 1-2bps lower.
- The bills strip has twist-flattened, with pricing -2 to +3.
- RBA-dated OIS pricing is flat to 3bps softer across 2025 meetings. A 25bps rate cut is still not fully anticipated until May. The probability of a rate cut at tomorrow's meeting remains low, with markets assigning only a 9% chance.
ASIA STOCKS: China Down Again as Stimulus Hopes Fade.
Dec-09 04:16
- Last week’s strong finish for China’s major indices faded today as hopes about more stimulus recede.
- Having finished Friday up very strongly, delivering a positive week, the CSI 300 declined -0.50%, Hang Seng -0.54%, Shanghai -0.40% and Shenzhen -0.80%.
- The ongoing uncertainty in Korea continued to weigh heavy on the KOSPI , again making it the worst performer in the region, down -2.50% in today’s trading, following last week’s decline.
- Malaysia’s FTSE KLCI took lead from the other major markets too today and in the absence of any key news, the path of least resistance was to fall and was down -0.30%.
- The Jakarta Composite was one of the few positive stories today rising +0.36% as news breaks on potential VAT changes coming.
- India’s has been a shining star amongst it’s Asia peers in terms of inflows, having turned what was a torrid period of outflows into the last week of strong inflows. The NIFTY 50 had a very good week last week up +2.2% and is starting off the week post no change from the RBI flat as the market digests the implications of the change in the cash deposit rate for banks.
FOREX: US Dollar Stronger Again, Yen Outperforming G10
Dec-09 04:11
The US dollar has continued to strengthen during APAC trading with the BBDXY USD up 0.2% and close to its intraday high. Thus the G10 has seen broad-based weakness against the greenback except for the yen, as was the case on Friday. NZD, NOK and EUR have depreciated the most.
- NZDUSD is down 0.3% to 0.5813, close to the intraday low. The government announced that it would go ahead with a capital injection into Kiwibank of around NZ$500bn. It wants to increase competition in the banking sector.
- Ahead of Tuesday’s RBA decision, AUDNZD is 0.2% higher at 1.0983. The RBA is unanimously expected to leave rates at 4.35%, whereas the RBNZ has eased 125bp this year to 4.25%. AUDUSD is down 0.1% to 0.6384, close to the intraday trough.
- USDJPY has range traded between 149.70 and 150.10. The pair is currently little changed at 149.95. AUDJPY is down 0.1% to 95.74.
- EURUSD is down 0.3% to 1.0537, close to the intraday low. NOK and SEK are also lower leaving the crosses against the euro little changed. EURCHF is down 0.1% to 0.9274 and EURGBP -0.1% to 0.8282.
- Equities are generally lower with the Hang Seng down 0.6%, ASX -0.2% but Nikkei up 0.2% and S&P e-mini flat. Oil prices are moderately higher with WTI +0.4% to $67.46/bbl. Copper is slightly lower and iron ore is steady around $104/t.
- Later November NY Fed 1-year inflation expectations print and ECB’s Cipollone and BoE’s Ramsden speak. The Fed is in its pre-meeting blackout period.
