FOREX: Antipodean Wrap - AUD & NZD Continue To Outperform
May-02 04:16
The Asian session has seen risk trade well this morning as the market attempts to look through the negative earnings of Apple and Amazon to concentrate on some positive US-China trade headlines. As well as some positive trade deal comments from Japan, “Japanese Prime Minister Shigeru Ishiba says he was told the second round of tariff talks between his chief negotiator Ryosei Akazawa and US officials including Treasury Secretary Scott Bessent was “positive and constructive.”(per BBG). NFP will dictate price action tonight.
- AUD/USD - Asian range 0.6375 - 0.6420, the AUD is currently dealing around 0.6415. While the support around 0.6350 holds the focus will be on building upward momentum. The AUD looks to be building a solid base from which to move higher again, first target the 0.6600 area.
- AUD/JPY - Asian range 92.64 - 93.48, price goes into London trading around 93.20. AUD/JPY broke the resistance around 92.00 yesterday and has had a powerful extension as shorts are pared back, short term this move could have more to go. Weekly resistance seen between 94.00/96.00 should see sellers remerge.
- NZDUSD - Asian range 0.5894 - 0.5938, going into London trading around 0.5930. With support having held once more around 0.5900, a move above 0.5950 could see the move higher build momentum again.
- AUD/NZD - Asian range 1.0785 - 1.0823, the Asian session currently trading 1.0810. Sellers could be expected again back towards the 1.0850 area.
Fig 1 : NZD/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg
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GOLD: Buyers Re-Emerge as Gold Surges in Afternoon Trading.
Apr-02 04:14
- Having hit $3,149.00 yesterday, gold retreated as profit taking set in and traders squared their positions ahead of the tariff announcements.
- Opening in the Asian trading session at $3,113.38, gold did very little in the morning session before a surge in afternoon trading to a high of $3,135.71, before backing off to $3,125.09
- As the gold price hits levels that were (for many forecasters) a year end target, BofA is the first to flinch, suggesting that gold could reach US$3,500.
- Up 19% year to date, Gold has surged over 3% in three trading sessions, prior to the decline into the US market close.
- Demand for Gold ETFs remains strong with assets under management growing by over 5% this year.
- Gold’s rally is impacting markets globally with South African mining stocks putting in their best monthly performance on record in March.
- Wednesday in the US sees the President announcing wide ranging tariffs on ‘all’ of America’s trading partners, a move that inevitably will see counter measures and bring with it volatility.
BONDS: NZGBS: Bull-Flattener Ahead Of Tariff News, May-32 Syn Tap
Apr-02 04:05
NZGBs closed mid-range, flat to 3bps richer, with the 2/10 curve flatter.
- Cash US tsys are ~2bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- The NZ-US 10-year yield differential closed 3bps tighter +35bps after reaching the highest level since October last year yesterday.
- Today the NZ Treasury announced that an additional NZ$4.0bn of the nominal 15 May 2032 bond had been issued via syndicated tap. The bonds, which carry a coupon of 2.00%, were issued at a spread of 14bps over the 15 May 2031 nominal bond, at a yield to maturity of 4.3100%. Total book size, at final price guidance, exceeded NZ$18.3bn. There will be no further issuance of the bond prior to July 2025.
- Swap rates closed flat to 2bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed little changed. 24bps of easing is priced for April, with a cumulative 72bps by November 2025.
- Tomorrow, the local calendar will see CoreLogic Home Value and ANZ Commodity Price data.
JGBS: Cash Little Changed At Lunch, Gov Ueda Talks Tariffs
Apr-02 03:51
In early afternoon dealings, JGB futures are stronger and at session highs, +15 compared to settlement levels.
- Outside of the previously outlined monetary base date, BoJ Governor Ueda has stated that US tariffs could significantly impact trade activity in affected nations, depending on their size and area. Ueda expressed uncertainty about the overall picture of the policies, awaiting an official announcement, and will closely watch developments to grasp their economic impacts.
- “A Bank of Japan rate hike in May would be too early, according to Kazuya Shimba, Secretary General of the Democratic Party for the People, due to the need to assess the impact of US tariffs and ongoing wage talks.” (per BBG)
- Cash US tsys are 2-3bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- The latest information includes: a CNBC reporter posting on X, citing Republican Rep. Kevin Hern, that the tariff rates announced Wednesday will be the highest they will go and countries can then take steps to bring the tariffs down.
- Cash JGBs are little changed across benchmarks out to the 10-year and 1-2bps richer beyond.
- Swap rates are little changed. Swap spreads are mixed.
