AUD: Asia Wrap - AUD/USD Extends Retracement On Employment Data
The AUD/USD has had a range of 0.6634 - 0.6659 in the Asia- Pac session, it is currently trading around 0.6640, -0.23%. The AUD pulled back overnight and this morning's unexpected drop in employment has seen the move extend lower, retracing some of its recent gains. The AUD move higher failed towards 0.6700 as the USD found some relief. Do we see a further short-term retracement in the USD, if so I suspect the reprieve is temporary. The price action in the AUD/USD suggests dips will be supported for now with the first buy-zone back towards the 0.6550 area. A retest of the 0.6700 area at some point seems to be a question of timing.
- MNI AU - Jobs Volatile, Underemployment Very Low: Australia’s monthly labour market data are volatile and August seemed to unwind July’s moves. Looking through this, annual employment growth was its lowest since the pandemic but the unemployment rate held steady at 4.2% and underemployment continued to trend down to its lowest since 1991. RBA Governor Bullock focussed on the Q2 average unemployment rate given the data’s volatility and that is likely to remain the case. September prints on 16 October.
- MNI AU - Q3 Data Show Stabilisation, Underemployment Still Trending Down: While the headline employment and unemployment rate numbers get most of the attention, the RBA looks deeper and monitors underemployment, youth unemployment, hours worked, vacancies, the quit rate and labour shortage measures closely. Governor Bullock was also clear that given the data’s volatility, it focuses on the quarterly averages. While August employment and hours were disappointing, other variables signalled that the labour market remains solid.
- " AUSTRALIA PM ALBANESE: ANNOUNCES A$5 BILLION NET ZERO FUND IN THE NATIONAL RECONSTRUCTION FUND, A$2 BILLION FOR THE CLEAN ENERGY FINANCE CORPORATION TO CONTINUE TO DRIVE DOWNWARDS PRESSURE ON ELECTRICITY PRICES" RTRS
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD1.13b), 0.6650(AUD774m). Upcoming Close Strikes : 0.6650(AUD906m Sept 23), 0.6750(AUD1.16b Sept 19) - BBG
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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JPY: Asia Wrap - USD/JPY Trying To Bounce As USD Shorts Are Pared Back
The Asia-Pac USD/JPY range has been 147.62-148.11, Asia is currently trading around 147.75, -0.10%. USD/JPY continues to find solid demand around 147.00. Price continues to hold above the support area between 146.00/147.00, a sustained move below this support is needed to turn the momentum potentially lower again. While this plays out it looks to be more range trading within the wider 146.00-151.00 range. CFTC Data shows leveraged funds have bought this dip in USD/JPY betting the support remains intact.
- (Bloomberg) - “The pressures on the Fed to again consider defying rates markets and hold next month just received a (rather modest) boost as S&P Global Ratings delivered a solid report card for the US’s economy and outlook. While the firm expects rate cuts are coming, as do most economists, it doesn’t signal any need to rush.”
- “JAPAN VETERAN LDP LAWMAKER KONO: BOJ MUST GRADUALLY RAISE INTEREST RATES AS IT IS UNDESIRABLE TO KEEP REAL BORROWING COSTS NEGATIVE FOR A LONG TIME. 'BETTER TO START EARLY,' WHEN ASKED HOW SOON BOJ SHOULD RESUME INTEREST RATE HIKES. JAPAN MUST REVERSE WEAK YEN, SEEK SOMEWHAT STRONGER YEN.” - RTRS
- "JAPAN 20-YEAR BOND BID-COVER RATIO 3.09 VS 12-MONTH AVG 3.24" - BBG
- (Bloomberg) - “Japanese bonds are having a knee-jerk shift lower after the bid-to-cover ratio came in below its one-year average, even though the average 20-year yield was highest this year at auction. That’s hardly a vote of confidence when the 20-year sector is yielding around 1% more than the benchmark 10-year.”
- Options : Close significant option expiries for NY cut, based on DTCC data: 147.40($301m), 148.35($459m).Upcoming Close Strikes : 146.80($1.2b Aug 21), 147.90($1.42b Aug 22) - BBG.
- CFTC data shows last week asset managers maintained their JPY longs +60866( Last +60532), leveraged funds used the dip to add to their newly built short JPY position -41257(Last -29308).
Fig 1 : USD/JPY Spot 2HChart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA: Bond Futures Flat in Morning Trade
- China's bond futures have done very little in the morning session, after yesterday's sell off.
- The 10year had one of its biggest one day sell off yesterday falling -0.33 and unsurprisingly, is quiet today down just -0.01 at 107.88.
- Yesterday's falls took the 10-year further below all major moving averages, the nearest being the 20-day EMA at 108.33
- The 2-year future is up +0.01 at 102.31 and remains below all major moving averages. The 20-day EMA above is 102.35.
- Bonds are steady with the CGB 10 yr -1bp lower at 1.77%
ASIA STOCKS: Mixed Trends, Australia Underperforms, HK/China Holding Up
Asian markets are mixed in the first part of Tuesday trade, although aggregate moves for most markets are not much beyond 0.50% at this stage. US equity futures are down a touch, after little net change in cash trade on Monday. There have been a host of headlines related to Trump meeting with Ukraine President Zelenskyy and key EU leaders. Trump also spoke with Russian President Putin. Next steps will reportedly be a Putin/Zelenskyy meeting, although no time or place has been set yet. Broader market impact has been limited so far from these headlines.
- At the lunch time break, China and Hong Kong markets are a touch higher. The CSI is near 4245, as the onshore equity rally continues. The HSI is up just under 0.20%. Southbound stocks flows are firmer than yesterday but at this stage well short of the surge to record highs we saw last Friday.
- Onshore media also note the surge in retail accounts opened this year. "In the first seven months of 2025, 14.5 million new retail accounts were opened on the Shanghai Stock Exchange, a 37% year-over-year increase, according to exchange data" (per Securities Daily, via BBG).
- Japan markets are down slightly but the Topix is still above 3100 at this stage. South Korea's Kospi and the Taiex in Taiwan are both off by around 0.30% so far today.
- Australia's ASX 200 is down close to 0.80%, the worst performer in the region so far today. Weakness from CSL, post its full year results, have weighed. Commodity bellwether BHP also reported lower profits, although its share price is holding up.
- In South East Asia, Singapore and Malaysia are up around 0.50%, while the Philippines and Indonesia are down slightly. Indian markets are ticking up in the first part of trade, after solid gains on Monday.
