FOREX: Asia FX Wrap - USD Bounce Needs Confirmation Of US Entering The Conflict
The BBDXY has had a range of 1209.02 - 1212.22 in the Asia-Pac session, it is currently trading around 1211. "CHINA'S XIE: BENEFITS OF US-CHINA TRADE "GENERALLY BALANCED, PROTECTIONISM NO BETTER THAN DRINKING POISON WHEN THIRSTY, CURRENT US TARIFFS ON CHINA STILL `UNREASONABLY HIGH'' - BBG
- EUR/USD - Asian range 1.1451 - 1.1489, Asia is currently trading 1.1465. EUR has rejected the move above 1.1600 but dips should continue to find demand, first support back towards the 1.1400 area then 1.1100/1200. Price action does not look great in the short-term with a potential false break above 1.1500/1.1600.
- GBP/USD - Asian range 1.3387 - 1.3433, Asia is currently dealing around 1.3405. The GBP looks to have failed in its attempts to break above the Weekly 1.35/36 pivot. First support is seen around the 1.3400 area, a sustained move back below here and we could see a deeper correction unfold.
- USD/CNH - Asian range 7.1919 - 7.1975, the USD/CNY fix printed 7.1729. Asia is currently dealing around 7.1935. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX -0.20%, Gold $3373, TYU5 110-28, BBDXY 1211, Crude oil $75.09
- Data/Events : Spain Home Sales, EZ Construction Output,
Fig 1: GBP/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUD: Asia Wrap - AUD Lower As RBA Lowers Inflation & Growth Forecasts
The AUD/USD has had a range of 0.6423 - 0.6459 in the Asia- Pac session, it is trading around 0.6425. The RBA lowered rates by 25 basis points as expected to 3.85% and lowered inflation and growth forecasts.
- The AUD has come off as the RBA lowers inflation and growth forecasts: “ The Board judged that the risks to inflation have become more balanced. Inflation is in the target band and upside risks appear to have diminished as international developments are expected to weigh on the economy. With inflation expected to remain around target, the board therefore judged that an easing in monetary policy at this meeting was appropriate.”
- "AUSTRALIA NATIONAL PARTY LEADER LITTLEPROUD: ENDING COALITION WITH LIBERAL PARTY, NATIONAL PARTY WILL SIT ALONE ON A PRINCIPLE BASIS - [RTRS]"
- The AUD/USD has found demand around 0.6400 again overnight, expect buyers to be around on dips while the support in the AUD holds, a close back below 0.6300/50 would start to challenge the newly formed uptrend.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6350(AUD367m May 20), Upcoming Strikes : 0.6375(AUD483.6m May 23), 0.6550(AUD480.3m May 23)
- AUD/JPY - Today's range 93.02 - 93.84, it is trading currently around 93.05. Decent demand seen towards the 93.00 area where it holds again overnight. A sustained close back below 91.50/92.00 is needed to turn the focus back towards the lows again. If stocks continue to press higher AUD/JPY could drift back towards the 96.00 area.
RBA: RBA Cuts, Trims Inflation & Growth Forecasts, AUD & OIS Softer
The RBA cut rates as expected by 25bps and left a dovish first impression in terms of the statement, by trimming its inflation (trimmed mean) and growth forecasts slightly. In the bond space, futures are ym +4 xm+3. OIS is flat to -5, with late 2025 leading. AUD/USD is back to 0.6430/35 (post decision lows were at 0.6426). We were near 0.6440/45 prior to the outcome. More details to follow.
RBA SAYS INFLATION HAS FALLEN SUBSTANTIALLY
- RBA SAYS INFLATION HAS FALLEN SUBSTANTIALLY
