FOREX: Asia FX Wrap - BBDXY Testing First Support
The BBDXY has had a range of 1203.29 - 1205.45 in the Asia-Pac session, it is currently trading around 1203, -0.10%. The BBDXY is probing its first support just below 1205, with the market still very quick to jump onto any opportunity to sell the USD. A sustained move back above the 1230 area would be needed to put pressure on the bears. China Exports and Imports Beat Estimates for July: the numbers tell a more encouraging story for the longer-term outlook.
- EUR/USD - Asian range 1.1650 - 1.1676, Asia is currently trading 1.1670. The pair has bounced nicely off the important 1.1300/1.1400 area. The market is probing its first resistance towards the 1.1700 area, Sellers should be around this area first-up.
- GBP/USD - Asian range 1.3346 - 1.3369, Asia is currently dealing around 1.3365. The pair bounced nicely off the 1.3100/1.3200 support area. I would suspect sellers could be around this bounce back towards 1.3400/1.3450 initially.
- USD/CNH - Asian range 7.1796 - 7.1875, the USD/CNY fix printed 7.1345, Asia is currently dealing around 7.1830. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
- Cross asset : SPX +0.20%, Gold $3380, US 10-Year 4.242%, BBDXY 1203, Crude Oil $64.98
- Data/Events : France Trade Balance/Wages, Germany Industrial Production/Trade Balance, EZ ECB Economic Bulletin
Fig 1: GBP/USD Spot 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUSSIE BONDS: Cheaper After RBA Surprise Market With No Cut
ACGBs (YM -12.0 & XM -8.0) are 3-6bps cheaper after the RBA surprised the market by leaving the cash rate at 3.85%. A 25bp rate cut today was given a 92% probability ahead of the decision by the market.
- The RBA Board sees inflation risks as more balanced and the labour market as strong, but remains cautious due to uncertainty in demand and supply. It will await more data to confirm inflation is tracking toward 2.5%.
- Policy remains flexible to global developments. A 6–3 majority supported today’s decision, and future statements will include an unattributed record of votes. The Board remains focused on price stability and full employment.
- Cash ACGBs are 6-8bps cheaper after the decision with the AU-US 10-year yield differential at -11bps.
- The bills strip has shunted cheaper, with pricing -5 to -12 after the decison.
- RBA-dated OIS pricing is 11-23bps firmer across meetings after the decision. A cumulative 64bps of easing priced by year-end versus 75bps pre-RBA
- Tomorrow, the local calendar will see a speech by RBA Hauser.
- The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond tomorrow and A$1000mn of the 2.75% 21 November 2029 bond on Friday.
AUD: RBA Reaction
The RBA has left rates unchanged in a surprise decision. The AUD went into the Meeting trading around 0.6510 and quickly moved to 0.6550 on this as the market was almost fully priced for a cut.*RBA: JUDGED RISKS TO INFLATION HAVE BECOME ‘MORE BALANCED’ - BBG
- AUD/USD - 0.6545, +0.83%
- AUD/NZD - 1.0862, +0.32%
- EUR/AUD - 1.7950, +0.50%
- AUD/JPY - 95.50, +0.75%
- XPU5 - 8550, -0.26%
- EOY OIS 1-10bps higher, bear steepener yields 1-5bps higher
RBA SAYS BOARD WANTED MORE DATA, CAN WAIT
- RBA SAYS BOARD WANTED MORE DATA, CAN WAIT
