FOREX: Antipodean Wrap - AUD & NZD Outperform In The Crosses
May-01 04:00
This Asian session has seen another decent leg higher in risk as Microsoft and Meta beat earning expectations. The BOJ left rates unchanged and downgraded both inflation and GDP forecasts. The AUD and NZD continue to benefit from the better outlook for risk.
- AUD/USD - Asian range 0.6389 - 0.6427, the AUD is currently dealing around 0.6410. AUD continues its attempts to hold onto its gains above 0.6400, managing to shrug off the bounce in the USD for now. While the support around 0.6350 holds the focus will be on building upward momentum. Should 0.6350 break shorts will be keen to add again.
- AUD/JPY - Asian range 91.35 - 92.06. Price goes into the London trading around 92.04, testing the upper boundary of the 0.8950/0.9200 range. If risk remains on the front foot there is a chance we see this gain momentum above 0.9200.
- NZDUSD - Asian range 0.5930 - 0.5951, going into London trading around 0.5940. Demand should return first around 0.5900, then around the 0.5800 area.
- AUD/NZD - Asian range 1.0760 - 1.0801, the Asian session currently trading 1.0785. Sellers are capping the 1.0800 area for now, expect more supply towards 1.0850.
Fig 1 : AUD/JPY Spot Hourly Chart
Source: MNI - Market News/Bloomberg
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CHINA: Bond Futures Down as Liquidity Withdrawn via OMO.
Apr-01 03:57
- Following one of the bigger withdrawals of liquidity of late via this morning’s OMO, bonds futures are lower across all maturities.
- China’s 10YR bond future is lower by -0.09 at 107.755
- Todays’ move lower has seen the 10YR breach the 20-day EMA of 107.80, having briefly traded above the 100-day EMA last week.
- Below current levels is the 200-day EMA of 107.57.
- China’s 2YR bond future is lower by -0.048 at 102.34, and remains below all major technical levels, the nearest being the 20-day EMA at 102.43
- China’s 10YR government bond is 1bp lower in yield at 1.81%.
- According to a statement released, the PBOC did not conduct any government bond buying or selling for all of March for the third consecutive month. (source: PBOC)
AUSSIE BONDS: Slightly Richer, RBA Leaves Cash Rate Unchanged
Apr-01 03:42
ACGBs (YM +1.0 & XM +1.5) sit slightly stronger after the RBA decision to leave the cash unchanged at 4.10%. According to the accompanying statement:
- Inflation has significantly declined since 2022, aligning with forecasts, but the Board remains cautious.
- Domestic demand is recovering, though some sectors struggle to pass on costs. Labour market conditions remain tight despite easing wage pressures. Economic uncertainty persists, with risks to growth, inflation, and global trade.
- The Board prioritises sustainably returning inflation to target and will adjust policy as needed. Future decisions will be guided by economic data, global developments, and financial market trends to ensure long-term price stability and full employment.
- Cash US tsys are slightly richer in today's Asia-Pac session.
- Cash ACGBs are 1bp richer to 2bps cheaper with the AU-US 10-year yield differential at +20bps.
- Swap rates are 1bp lower.
- The bills strip is flat across contracts.
- Tomorrow, the local calendar will see Building Approvals and a speech from RBA Assistant Governor Chris Kent, who oversees financial markets, at the KangaNews Debt Capital Market Summit.
- The AOFM plans to sell A$800mn of the 3.75% 21 May 2034 bond tomorrow and A$600mn of the 1.00% 21 November 2031 bond on Friday.
RBA: A$ Slightly Higher Po t RBA, Rates Little Changed
Apr-01 03:36
The RBA left the cash rate unchanged as expected. The central bank remains cautious around the outlook, highlighting tariff uncertainties.
- The A$ is slightly higher post the decision, we did get to 0.6265, but sit slightly lower now, last near 0.6255/60. This is around 0.20% firmer for the session. The better regional equity tone is helping, with HK markets up over 1% (the earlier Caixin PMI helping).
- For rates we have seen little net change post the decision.
