FOREX: Asia FX Wrap - USD Keeps Its Bid Tone
The BBDXY has had a range of 1215.25 - 1219.21 in the Asia-Pac session, it is currently trading around 1218. “The Fed’s John Williams said policymakers should focus on anchoring not just long-term price expectations, but “the whole curve” to prevent inflation from becoming persistent or permanent”(BBG). “The ECB’s Philip Lane said inflation will hover around 2% for the rest of the year. The impact of US tariffs on medium-term price pressures will determine monetary policy, he told the FAZ.”(BBG)
- EUR/USD - Asian range 1.1301 - 1.1345, Asia is currently trading 1.1305. EUR has drifted lower for most of the Asian session. It is worth noting that we are heading into the corporate month-end and this could see some USD demand over the next day or 2. Dips back to 1.1200 are expected to be supported.
- GBP/USD - Asian range 1.3473 - 1.3522, Asia is currently dealing around 1.3470. The GBP is struggling to hold above the pivotal 1.3500 area for now, looking for support to return back towards the 13300/3400 area which could be seen if the corporate USD demand materializes.
- USD/CNH - Asian range 7.1868 - 7.1993, the USD/CNY fix printed 7.1894. Asia is currently dealing around 7.1950. Sellers should be found on a bounce back towards the 7.2200 area again. Andreas Steno Larsen on X : The elephant in the room. USDCNH needs to go to 6.80 at least. https://x.com/AndreasSteno/status/1926115935200440525
- Cross asset : SPX -0.10%, Gold $3297, US 10-Year 4.47%, BBDXY 1218, Crude oil $61.19
Data/Events : Fra GDP & PPI, Ger Unemployment, ECB CPI Expectations
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
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BUND TECHS: (M5) Bullish Structure
- RES 4: 133.90 1.236 proj of the Mar 25 - Apr 7- 9 price swing
- RES 3: 133.00 round number resistance
- RES 2: 132.56 High Feb 28 and a key resistance
- RES 1: 132.03 High Apr 7 and the bull trigger
- PRICE: 131.67 @ 05:49 BST Apr 28
- SUP 1: 130.64/129.92 20-day EMA / Low Apr 11
- SUP 2: 129.02 Low Apr 10
- SUP 3: 128.60 Low Apr 9 and a key support
- SUP 4: 128.47 Low Mar 28
Bund futures are in consolidation mode and continue to trade just below their recent highs. A bull cycle remains in play and the pullback between Apr 7 - 9 is considered corrective. Attention is on resistance at 132.03, the Apr 7 high and a bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 132.56, the Feb 28 high. Firm support lies at 128.60, the Apr 9 low. A break of this level would alter the picture.
ASIA STOCKS: A Positive Regional Day ahead of Earnings
The focus this week will be on major China bank earnings as investors see if tariffs are impacting companies yet as markets show signs that the tariff threats may not be the driving forces in the week ahead. With over 400 companies reporting this week, investors will be looking for firsthand evidence that the trade war is impacting profitability.
As the press conference in China reiterated its commitment to jobs and support to the economy the government indicated that contingency plans are in place and that they remain 100% confident of achieving 5% economic growth.
- China’s major bourses were mixed today with the Hang Seng barely gaining up +0.07% whilst the CSI 300 was flat. Shanghai was down -0.03% and Shenzhen -0.72%.
- The KOSPI had a quiet start to the week in a week with significant data releases, rising just +0.16%.
- The FTSE Malay KLCI rose +0.65% to add to last week’s modest gains.
- The Jakarta Composite was up +0.72% today following on from last week's strong week where it gained +3.74%.
- In Singapore, the FTSE Straits Times was down -0.43% whilst the PSei in the Philippines rose +0.39%.
- India’s NIFTY 50 is up +0.90% in Monday’s trading, following on from last week’s poor end to the week with losses on Thursday and Friday
BONDS: NZGBS: Bull-Flattener As Local Market Plays Catch-Up
NZGBs closed showing a bull-flattener, with benchmark yields 4-9bps lower.
With the local calendar empty, today’s moves reflected US tsys’ strong close to last week. The local market was closed on Friday for the ANZAC Day holiday.
- Cash US tsys are little changed in today's Asia-Pac session. GDP, ISM Manufacturing and NFM payrolls are the main events in this week’s US calendar. Trump’s first 100 days in office speech is tomorrow.
- “RBNZ increased its foreign currency intervention capacity to a record NZ$26.7b at the end of March as it sold New Zealand dollars.” (per BBG)
- The NZ economy will expand 0.5% q/q in 1Q, according to the latest results of a Bloomberg News survey. The RBNZ’s OCR is forecast to drop from 3.50% to 3.25% by end-2025.
- Swap rates closed 4-6bps lower, with 2s10s curve flatter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 27bps of easing is priced for May, with a cumulative 82bps by November 2025.
- Tomorrow, the local calendar will see Filled Jobs data and a Pre-Budget speech from Finance Minister Willis.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
