AUD: Asia Wrap - AUD Back Above 0.6600 As Risk Trades Higher Into Inflation Data

The NZD/USD had a range of 0.5944 - 0.5962 in the Asia-Pac session, going into the London open trading around 0.5955, -0.02%. Risk has traded a little higher this morning, E-minis +0.20%, NQU5 +0.20%. NZD/USD bounced nicely off its 0.5850 support last week but depending on your view I would suspect sellers could return on any bounce back toward 0.6000/0.6050. For the moment firmly back in the 0.5850-0.6100 range looking for a catalyst to break and give clearer direction, US CPI tomorrow is an important input.

• "NZ'S LUXON: SEEING A TWO-SPEED ECONOMIC RECOVERY IN NZ, LAST THREE MONTHS HAVE BEEN CHALLENGING FOR ECONOMY. EXPECT FUTURE INTEREST RATE CUTS" - BBG
• MNI NZ: July Data Releases Ahead Of August RBNZ Meeting. With the next RBNZ meeting approaching (August 20), this week contains a number of high frequency releases that the MPC monitors and should give a sense for how the economy began Q3. July card spending is out Wednesday and while it is off its lows, growth has remained soft. There could be some payback in the month following the 0.5% m/m rise in June. On Friday, July monthly price series are released including food, travel, electricity and rents. Food and power price inflation have been trending higher while petrol and rents have been moderating.
• Kelly Eckhold(Westpac NZ) on LinkedIn - “Something to keep an eye on is the possibility that the reciprocal tariffs NZ got lumped with last week get removed by the courts. Sounds very possible as Trump is operating beyond his legal authority.”
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.5920(NZD583m), 0.5930(NZD646m), 0.5960(NZD301m). Upcoming Close Strikes :  0.5825(NZD300m Aug 14). - BBG
• CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
• AUD/NZD range for the session has been 1.0929 - 1.0960, currently trading 1.0940. The Cross continues to trade sideways after stalling towards the 1.1000 area once more. The range looks to be 1.0850-1.1000 for now.

Fig 1: NZD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

The Asia-Pac USD/JPY range has been 147.43 - 147.79, Asia is currently trading around 147.45, -0.20%. USD/JPY is consolidating within a 146.50-148.00 range. Price has moved very quickly away from the pivotal 151/152 area much to the relief of Institutional Yen longs and the BOJ. Price is holding above the support area between 146.00/147.00, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate. US CPI tomorrow night will be an important input.

• MNI JAPAN: Ishiba Maintains Intention To Remain PM As LDP Critics Threaten Recall. The governing Liberal Democratic Party (LDP) has concluded a two-hour meeting of lawmakers from both houses of the National Diet. The formal reason for the assembly was to assess the fallout from the 20 July House of Councillors election, in which the LDP-Komeito governing coalition lost its majority in the upper chamber. However, the meeting was also a chance for LDP lawmakers to voice their displeasure with PM Shigeru Ishiba, whose critics blame for the party's poor performance.
• (Bloomberg) -- “Data on Japanese bond buying show a “deliberate realignment of Japanese portfolio investment away from US sovereign debt and toward the sovereign markets of the eurozone,” according to strategists at Mizuho.”
• “Carry traders are piling into high-yielding EM currencies as wagers on Fed rate cuts weaken the dollar.” - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 147.00($470m).Upcoming Close Strikes : 150.25($1.47b Aug 13) - BBG.
• CFTC data shows asset managers reduced their JPY longs +60532( Last +75119), leveraged funds slightly reduced their newly built short JPY position -29308(Last -31280).

Fig 1 : JPY CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

The AUD/USD has had a range of 0.6514 - 0.6528 in the Asia- Pac session, it is currently trading around 0.6525, +0.05%. A very quiet start to the week saw AUD/USD consolidate above 0.6500. Risk has traded a little higher in our session, E-minis +15%, NQU5 +0.15%. 

• (Bloomberg) - “Reports that AMD and Nvidia will pay 15% of their China revenue to the US government should be a negative for those companies and for tech more broadly. Investors may shrug off the news or even welcome it in the short term as a sign that the companies can go on selling chips to China, but the longer-term outlook is that profit margins may narrow.”
• MNI -  The RBA decision is on Tuesday August 12 and is widely expected to cut rates 25bp to 3.60% given the further moderation in underlying inflation in Q2 and signs that the labour market has reached a turning point and is weakening. It had 50bp of easing for H2 assumed in its May projections. There will be an update to the RBA outlook provided with the decision but it is likely to be consistent with the Board's cautious approach to easing.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6565(AUD783m Aug 12), 0.6600(AUD1.25b Aug 14) - BBG
• CFTC Data shows Asset managers added to their shorts -60729(Last -49183), the Leveraged community added very slightly to their own shorts -13997(Last -13823).
• AUD/JPY - Asia-Pac range 96.18 - 96.38, Asia is trading around 96.20. The pair has bounced to test its first resistance around the 96.50 area. There should be sellers around here initially, a sustained break below 94.50/95.00 is needed to signal a deeper move lower or a break above 97.50 would reinstate the momentum higher.

Fig 1: AUD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P