AUD: Asia Wrap - AUD Holds Up
May-19 04:05
The AUD/USD had a range of 0.6400 - 0.6422 in the Asia- Pac session, it is trading around 0.6410. AUD/USD continues to find demand sub 0.6400, while underperforming in the crosses.
- “Australia is “up for a deal” with the EU but not at any price, PM Anthony Albanese said, offering cautious optimism after years of talks.”(BBG)
- MNI - The RBA decision is announced tomorrow and is widely expected to cut rates 25bp to 3.85% after Q1 trimmed mean CPI fell within the 2-3% target band. After stronger-than-expected Q1 wages and April employment data, it is likely to retain its cautious tone regarding future easing and reiterate that uncertainty is currently very high. Updated staff forecasts will be published with the meeting statement.
- Bloomberg - “The Australian dollar is positioned for upside should the RBA deliver a hawkish cut. The trimmed mean CPI remains substantially above the middle of the 2 to 3% target range, while labor market data is holding firm and fiscal spending is strong. The central bank is overwhelmingly expected to ease policy, but those factors argue for policymakers to express caution about further reductions if they do so. Investors are betting the RBA will lower rates twice in the second half of the year, so those positions look vulnerable to a rapid unwind.”
- (Bloomberg) -- “A few larger exporters were seen buying the Australian dollar in the Tokyo morning session to hedge out their US dollar receipts, according to Asia-based FX traders.”
- The AUD/USD has found demand around again 0.6400 today, 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.
- MNI FX OPTIONS: Expiries for May19NY cut 1000ET (Source DTCC) : AUD/USD: $0.6525(AUD393.9m), Upcoming Strikes : 0.6350(AUD367m May 20)
AUD/JPY - Today's range 92.88 - 93.23, it is trading currently around 93.10. Support is again being challenged back towards the 93.00 area. There should be some demand around 92.00/93.00 first up but a sustained close back below 91.50/92.00 would turn the focus back towards the lows again.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-18 05:18
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
Apr-18 05:16
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
CHINA: Bond Futures Marginally Up Despite Liquidity Injection.
Apr-18 04:02
- China’s bond market reacted very little to a second day of sizeable liquidity injection.
- China’s 10YR bond future is up just +0.03 at 109.04 and remains firmly above all major moving averages. The nearest being the 20-day EMA at 108.61.
- The 2YR bond future is down -0.02 at 102.46; remaining below all major moving averages – the nearest being the 20 day EMA at 102.52.
- The 10YR CGB is marginally lower in yield at 1.64%
