FOREX: Asia FX Wrap - BBDXY Can't Bounce, Eye's 1200 Pivot

• Following the long labour day break in China the first trading day back has seen marginally stronger bond markets, despite the Central Bank withdrawing liquidity in the open market operations.
• China’s 10YR bond future is up just +0.05 to 109.10; consolidating its’ position above all major moving averages.  The nearest being the 20-day EMA at 108.79
• China’s 2YR bond future has barely moved post the holiday break and remains at 102.35, below the 20-day EMA of 102.42.
• CGB’s are little changed with the CGB 10YR at 1.62% (-0.5bp today). 
• Later this week China is expected to issue CNY71bn of 2055 bonds and CNY170bn of 2026 bonds

AUDUSD is off its post-Australian data low of 0.6443 but remains down 0.2% to 0.6454 today as the US dollar rallies (USD BBDXY +0.2%). Aussie is also weaker against other major currencies despite higher commodity prices and HK/China equities, but US futures are lower. 

• March household consumption fell 0.3% m/m with Q1 volumes flat, while building approvals were down 8.8% m/m. Both series were impacted by Cyclone Alfred with data for Queensland particularly weak.
• AUDJPY is down 0.2% to 92.79, close to the intraday low, after a high of 93.05. AUDEUR is 0.2% lower at 0.5705, finding support around 0.5700. AUDGBP is -0.2% to 0.4856.
• AUDNZD has been trending down since it reached 1.0849 earlier in the session. It is now 0.2% lower at 1.0820, close to today’s trough.
• Equities are generally stronger with the Hang Seng up 0.6% and TAIEX +0.3% but ASX flat and S&P e-mini down 0.3%. Oil prices are stronger with WTI +1.6% to $58.04/bbl. Copper is 0.8% higher and iron ore is up to around $98-99/t.
• Later US March trade data are released as well as Canadian trade & PMI and European services/composite PMIs for April.

Building approvals in March were significantly weaker than expected falling 8.8% m/m with the more stable private houses component down 4.5% m/m. Multi-dwelling approvals fell 15.1% m/m, the second consecutive monthly fall. Housing shortages persist and this is an unfortunate development but appears also to have been impacted by Cyclone Alfred with Queensland recording a drop in house approvals but Victoria was also weak.

• Total building approvals are now up 13.4% y/y after 26.5% y/y in February with private houses down 3.3% y/y, the lowest since November 2023, but apartments still up 47.1% y/y.
• The ABS said that the weakness in house approvals was driven by Queensland and Victoria, while for non-houses there was a sharp drop in Victoria.
• The value of total residential building approved fell 7.6% m/m in March.
• Victoria is making up over half of the value of non-residential building, which may be crowding out the residential sector given skill shortages in construction.

Australia no. of residential building approvals y/y%