AUD: Asia Wrap - AUD/USD Drifts Higher
The AUD/USD has had a range of 0.6488 - 0.6505 in the Asia- Pac session, it is currently trading around 0.6505, +0.15%. US yields bounced hard in reaction to the PPI print, reigning in its expectations for larger rate cuts. This saw the USD get a reprieve and bounce off its support area. This has unfortunately really muddied the water for the AUD/USD just as it looked to be trying to build some upward momentum. AUD has drifted back to 0.6500 as a result, firmly in the middle of its 0.6350-0.6650 range with no clear direction. Softer China data was unable to get any follow through below 0.6500 in our session.
- China Property Investment & Sales Decline Further in July: There appears no end in sight for the property sector with Property Investment and Residential Property Sales declining further in July. Property investment Yet to date declined -12%, its worst result since late 2019 as COVID was erupting. Residential Property sales declined -6.2%, down from -5.2% in June. The data shows few bright spots with domestic loans for property and funds for property development down as new construction contracts -19.4%. Properties under construction were down -9.2%.
- China Industrial Production Expansion Weakest Since November: July's industrial production expanded +5.7%, missing estimates of +6.0% and below June's result of +6.8%. This was the weakest monthly result since November 2024.
- China Retail Sales Moderate Further in July: China's retail sales for July missed forecasts and was weaker than the month prior. July retail sales expanded +3.7%, the slowest since November 2024 and a second consecutive month of moderation.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6523(AUD562m), 0.6700(AUD498m). Upcoming Close Strikes : 0.6475(AUD428m Aug 18 ), 0.6515(AUD673m Aug 19), 0.6270(AUD435m Aug 19) - 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 95.59 - 96.07, Asia is trading around 95.75. The pair has bounced and tested its first resistance around the 96.50/97.00 area where momentum stalled. The sellers have capped the move for now, price is firmly back into the 94.50-97.50 range.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
CHINA: Bond Futures Mixed in Morning Session
- China's key bond futures are moving in opposite directions in a quiet morning session.
- Having finished yesterday higher by +0.19, the 10yr future is lower by just -0.02 today at 108.865.
- The 10yr remains between the 50-day EMA of 108.90 and the 100-day EMA of 108.80
source: Bloomberg Finance LP / MNI
- The 2yr future is lower by -0.01 today at 102.42, having finished yesterday higher by +0.03.
- The 2yr future remains below all major moving averages with the 20-day above at 102.45.
- The CGB 10yr is at 1.66%
STIR: RBA Dated OIS Remains Sharply Firmer Than Pre-RBA Levels
RBA-dated OIS pricing is modestly firmer across meetings today and remains 17–21bps above levels seen prior to 8 July RBA decision.
- The RBA held the cash rate steady at 3.85%, defying market expectations that had assigned a 92% probability to a 25bp rate cut.
- Markets now assign an 87% probability to a 25bp cut in August, with a total of 54bps of easing priced in by year-end—down from 75bps ahead of the RBA decision.
Figure 1: RBA-Dated OIS – Current Vs. Pre-RBA
Source: Bloomberg Finance LP / MNI
US: Is The Fed Chair Being Sacked Underpriced ?
A post on X from Congresswoman Anna Paulina Luna alluding to the imminent firing of Jerome Powell is adding fire to the situation. For the moment the market seems to be brushing this off and should it materialise is massively underpriced. What if the only way Trump can actually get yields lower is to replace the Fed Chair with someone who is willing to cut, and cut a lot. Should this happen it would further erode trust in US Assets and the USD would freefall once more. You would think the knee-jerk reaction would be higher in the Long-End but should an Uber Dove be appointed this could drive yields lower albeit with the front-end leading the charge and the curve steepening further.
- Rep. Anna Paulina Luna on X: “Jerome Powell is going to be fired. Firing is imminent.”
- (Bloomberg) -- “I think it sort of is,” President Donald Trump says when asked whether the renovations at the central bank were a fireable offense for Federal Reserve Chair Jerome Powell.
- Jim Bianco - “The betting market of “Will Trump fire Powell in 2025” has responded and the uptrend continues. See Graph Below.
Fig 1: Polymarket Betting - Will Trump Fire Powell In 2025
Source - @biancoresearch/Polymarket/Bloomberg
