NZD: Asia Wrap - Holds Above 0.6000, For Now ?
The NZD/USD had a range of 0.6010 - 0.6034 in the Asia-Pac session, going into the London open trading around 0.6025. The NZD has drifted higher in a quiet Asian session, still holding above 0.6000.
- NZ Data - Westpac Consumer Confidence Signals Spending Outlook Remains Soft. Westpac Q2 consumer confidence picked up to 91.2 from 89.2 in Q1, while the number of pessimists declined they continue to outnumber optimists with the breakeven-index 100. Sentiment also remains below Q4 2024’s 97.5. Households remain cautious about the outlook despite 225bp of RBNZ easing given heightened global uncertainty, an unbalanced recovery and a soft labour market.
- "NZ TREASURY CONFIDENT OF 2025 GROWTH DESPITE WEAK MAY DATA" - BBG
- The USD is finally looking like it could potentially bounce as the risk backdrop deteriorates. We have seen this before, is this time different ?
- The NZD is back to testing its support around the 0.6000 area, a break back below here and we could see a deeper pullback.
- While the support around 0.5850 holds in NZD/USD there should be buyers around on dips. A clear sustained break above 0.6050/0.6100 is needed for the pair to push higher.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5760(NZD1.16b). Upcoming Close Strikes : 0.5830(NZD300m June 23), 0.5755(NZD300m June20)
AUD/NZD range for the session has been 1.0758 - 1.0776, currently trading 1.0770. A top looks in place now just above 1.0900, the cross topped out last week towards the 1.0800/25 sell area, but the momentum lower seems to have stalled for now, with the range for June basically being captured within a 1.0750 - 1.0800 range.
Fig 1: NZD/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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GOLD: Gold Bounces on Market Weakness
- Gold has had a better day today in the Asia trading day, rising +0.36% to US$3,215.30.
- Despite solid Chinese data (I/P beat expectations, retail sales in line) equity markets fell giving gold a boost.
- Gold is also likely being supported by the Moody's downgrade of the US rating given concerns for the economic outlook and budget deficit.
- Gold prices fell 1.1% on Friday to $3203.65/oz pressured by higher US yields after a low of $3154.60 to be down 3.6% on the week and 2.6% in May. Bullion has been trending lower since its peak on May 6 at $3435.62. The USD index rose 0.2%.
JPY: Asia Wrap - USD/JPY Demand Seen Sub 145.00
The Asia-Pac range has been 144.81 - 145.47, Asia is currently trading around 145.30. USD/JPY opened lower and traded heavily for most of our session on the back of a knee-jerk reaction lower in stocks to the downgrade news.
- MNI - China Data: “The April activity outcomes were mixed, with retail weaker than forecast, while IP posted a modest upside surprise. Both measures slowed versus March outcomes. Headwinds still persist in the property sector, while house price growth slipped further into negative territory.”
- "*ISHIBA: CAN'T ACCEPT US TARIFFS INCLUDING FOR CARS" - BBG
- JAPAN FINMIN KATO: JAPAN NOT FACING PROBLEM PROCURING FUNDS FROM MARKET VIA DEBT ISSUANCE, IF JAPAN LOSES MARKET TRUST IN ITS FINANCES, IT MAY FACE RISE IN INTEREST RATES THAT COULD AFFECT DEBT REDEMPTION" RTRS
- USD/JPY tested below 145.00 this morning as stocks turned down, some demand seen below 145.00 after the Japanese fix.
- The support around 144/145 looks important now and a break would once again bring the focus back to the pivotal 140.00 area. The price action though does not look great and the market is still more comfortable selling rallies..
Options : Closest significant option expiries for NY cut, based on DTCC data: Y141.90($1.07bln), Y147.00($969.6m), Y146.50($780.7m), Upcoming Strikes : 145.50($1.03b May 20), 145.00($789.7m May 20), 142.00($878m May21)
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg
STIR: RBA Dated OIS Pricing Firmer Ahead Of Tomorrow’s RBA Policy Decision
RBA-dated OIS pricing is flat to 2bps firmer across meetings today, with late 2025 / early 2026 leading, ahead of tomorrow’s RBA Policy Decision.
- A 25bp rate cut in May is given a 95% probability, with a cumulative 75bps of easing priced by year-end.
- Notably, today’s moves leave meetings pricing 4-44bps firmer than levels before the release of Q1 CPI data on April 30.
Figure 1: RBA-Dated OIS – Current Vs. Pre-Q1 CPI
Source: MNI - Market News / Bloomberg
