AUD: Asia Wrap - AUD Stays Under Pressure

Risk has struggled to hold onto its gains leaking lower in Asia as the market gives back some of its gains made on Friday night. (Bloomberg) -- RBNZ increased its foreign currency intervention capacity to a record NZ$26.7b at the end of March as it sold New Zealand dollars, according to data released by the central bank Monday. (Bloomberg) -- S&P Global Ratings warned Australia’s prized AAA sovereign credit rating may be at risk if election campaign pledges result in larger structural deficits, debt and interest costs, highlighting fiscal pressures facing the next government.

• AUD/USD - Asian range 0.6373 - 0.6407, AUD has traded sideways most of the Asian session. Dips back to the 0.6250/0.6300 area should continue to find demand while the market continues to focus on a lower USD.
• AUD/JPY - Asian range 91.54 - 92.04. Price goes into the London trading around 91.80, testing the highs within the last 10 days range of 0.8950/0.9200. Goldman’s like AUDJPY as the best vehicle to tactically express JPY strength.
• NZDUSD - Asian range 0.5943 - 0.5968, going into London trading around 0.5960. Demand should return first around 0.5900, then around the 0.5850 area.
• AUD/NZD - Asian range 1.0717 - 1.0737, the cross has drifted sideways in the Asian session. Watch for supply to return on any bounce back towards the 1.0800 area.
•  

TYM5 has traded a little higher with a range of 111-18 to 111.22+ during the Asia-Pacific session. It last changed hands at 111-19, up 0.03 from the previous close.

• The US 10-year yield is a little higher, dealing around 4.24%, up from its close around 4.23%
• The US 2-year yield is up, dealing around 3.75%, up from its close around 3.748%.
• Risk has struggled to hold onto its gains leaking lower in Asia as the market gives back some of its gains made on Friday night.
• Bloomberg - “ Big tech earnings earnings estimates may be way too high, with analysts projecting an average of 15% profit growth for the magnificent Seven in 2025, despite recent market turmoil. Any hint of a shortfall in Microsoft, Apple, Meta and Amazon’s results this week will probably “cause a further selloff”.”
• US TSY: Block - Sell TYM5, SELL 3020 of TYM5 traded at 111-19+, post-time 01:36:55 BST (DV01 $193,162).
• The 10-year Yield, has put in a lower high around 4.40% and is attempting to break through the recent support around 4.25%. Should this give way the next support is towards the 4.10 area which should find supply once more as the market will continue to look for higher term premium while uncertainty remains elevated.
• Data/Events : US GDP, ISM Manufacturing, NFM payrolls the main events this week. Trump’s first 100 days in office speech tomorrow.
•  

At the Tokyo lunch break, JGB futures are stronger and Tokyo session highs, +16 compared to the settlement levels.

• (MNI) The BoJ board is expected to keep its 0.5% policy rate unchanged at the two-day meeting ending May 1, as policymakers monitor the economic and inflationary impact of recent U.S. trade policies and volatile markets.
• Uncertainty about the severity of the economic downturn caused by tariffs, along with the impact of the dollar/yen exchange rate, is making it difficult for bank officials to draft the likely scenarios they will present at the board meeting.
• Greater clarity on the economic outlook – particularly regarding the U.S. economy and Fed policy – is expected by July, when the BOJ releases its updated medium- to long-term growth and inflation forecasts. Should the U.S. fall into recession, it would likely remove any chance of a BOJ rate hike this year.
• Cash US tsys are flat to 1bp cheaper, with a flattening bias, in today’s Asia-Pac session after Friday’s solid gains.
• Cash JGBs are flat to 2bps richer out to the 20-year benchmark and 1-2bps cheaper beyond. The benchmark 10-year yield is 2.0bps lower at 1.322% versus the cycle high of 1.596%.
• Swap rates are 1-3bps lower. Swap spreads are mixed.