FOREX: Antipodean Wrap - AUD Pops On Higher Than Expected Inflation
MNI Aus Economist - Monthly trimmed mean and headline data for March were unchanged from February at 2.7% y/y and 2.4% respectively. The latter was higher-than-forecast. The trimmed mean has been around 2.7% for four consecutive months now, which is consistent with the RBA’s projection that it could remain around this rate and not make any further progress towards the 2.5%-target mid-point in 2025. Given global developments though, the outlook remains highly uncertain. Bloomberg - “New Zealand business confidence fell to a nine-month low in April due to US President Donald Trump's tariff policies. ANZ Bank revised down its outlook for New Zealand's economic growth and expects the Reserve Bank to cut the Official Cash Rate to 2.5% this year from 3.5% currently.”
- AUD/USD - Asian range 0.6379 - 0.6407, the AUD got a quick 20/30 point boost from a higher than expected CPI. Momentum though has been stalling above 0.6400 the last few days. Watch the support around 0.6350 if this gives way, look for buyers to return back towards 0.6250.
- AUD/JPY - Asian range 90.75 - 91.21. Price goes into the London trading around 91.20, continues to trade sideways in a range of 0.8950/0.9200.
- NZDUSD - Asian range 0.5924 - 0.5945, going into London trading around 0.5930. Demand should return first around 0.5900, then around the 0.5800 area.
- AUD/NZD - Asian range 1.0744 - 1.0797, the cross has benefited from the AU CPI in the Asian session. Watch for supply to return on any bounce back towards the 1.0850 area.
Fig 1 : AUD/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg
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JGBS AUCTION: Better Result For Today’s 2Y Supply
The 2-year bond auction showed improved demand today. The low price came in slightly above the forecasted 100.055, according to a Bloomberg poll, while the cover ratio rose to 3.4085x from 3.1637x. The auction tail also shortened slightly compared to the previous month.
- The auction took place with the 2-year yield standing slightly higher than last month’s outing, hovering just below the highest level since 2008 set last week.
- However, the 2/5 and 2/10 yield curves were 5-10bps steeper compared to the previous month's auction.
- The result is likely to be seen as constructive given it followed Friday’s Tokyo CPI release, a key leading indicator for national inflation, which printed higher than expectations across all measures.
- Demand metrics contrasted with the mixed results seen in the 5-year auction earlier this month and likely reflect heightened demand for haven assets as concern over the health of the US economy continues to grow.
- Post-auction, the 2-year yield has richened by approximately 0.5bp.
JGBS AUCTION: 2-Year JGB Auction Results
The Japanese Ministry of Finance (MoF) sells Y1,978.8bn 2-Year JGBs:
- Average Yield: 0.863% (prev. 0.826%)
- Average Price: 100.071 (prev. 99.948)
- High Yield: 0.869% (prev. 0.833%)
- Low price: 100.060 (prev. 99.935)
- % Allotted At High Yield: 46.8270% (prev. 62.4996%)
- Bid/Cover: 3.4085x (prev. 3.1637x)
ASIA STOCKS: India Inflows Intensify as Taiwan Goes the other Way.
With tariff headlines dominating, India is considering lowering tariffs on US agriculture products as strong inflows continue into the country. Taiwan and South Korea enjoyed a short respite in flows, only for that to turn significantly negative again with Indonesia and Malaysia out.
- South Korea: Recorded outflows of -$513m Friday, bringing the 5-day total to -$228m. 2025 to date flows are -$4,095m. The 5-day average is -$46m, the 20-day average is -$75m and the 100-day average of -$93m.
- Taiwan: Had outflows of -$1,028m Friday, with total outflows of -$2,607m over the past 5 days. YTD flows are negative at -$17,432. The 5-day average is -$521m, the 20-day average of -$614m and the 100-day average of -$255m.
- India: Saw inflows of +$947m as of the 27th, with a total inflow of +$3,231m over the previous 5 days. YTD outflows stand at -$12,796m. The 5-day average is +$646m, the 20-day average of -$14m and the 100-day average of -$144m.
- Thailand: Recorded outflows of -$67m yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$1,128m. The 5-day average is -$24m, the 20-day average of -$30m the 100-day average of -$18m.
- Philippines: Saw inflows of +$1m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$214m. The 5-day average is -$7m, the 20-day average of +$2m the 100-day average of -$7m.
