NZD: Asia Wrap - NZD/USD Continues To Be Well-Supported

The Asia-Pac USD/JPY range has been 143.44 - 143.99, Asia is currently trading around 143.55. USD/JPY has been under pressure in our sessions as the market's focus returns to buying the JPY as a safe haven once more as US Stocks futures move lower. This was due to increased trade tension between the US and China and the rise in geopolitical risk as Ukraine launches an unprecedented attack deep inside Russia. 

• “Ukraine attacked Russian airbases with drones destroying 40 bomber planes, according to the BBC. It appears in response to larger Russian attacks on Ukraine recently including Kyiv. Talks are due to start Monday.”(BBG)
• There is lots of speculation as to what the response from Russia may be to what some are calling its “Pearl Harbor”. https://www.newsweek.com/retired-us-commanders-react-ukraines-pearl-harbor-attack-russia-2079551
• "*JAPAN'S AKAZAWA ARRANGING US VISIT FROM THURS.: KYODO" - BBG
• US Equity futures are off around 0.5% in Asia and this has seen the JPY outperform across the board.
• The market seems very confident of a move lower in USD/JPY but with positioning quite large now we have seen the risks of pullbacks increase. Resistance around the 146.00 area held perfectly and the JPY bulls would be quite relieved as well as vindicated by the price action. The next pivotal trigger points look to be below 140.00 on the downside and above 146.50 on the topside.
• Options : Close significant option expiries for NY cut, based on DTCC data: 144.00($670m). Upcoming Close Strikes : 140.00($1.88b June 5), 142.00($884m June 5).

• CFTC data shows Asset managers maintained their already extensive JPY longs, and leveraged funds reduced their longs that had just started to be built up.

  Fig 1 : JPY CFTC Data

  

  Source: MNI - Market News/Bloomberg

The NZD/USD had a range of 0.5960 - 0.6009 in the Asia-Pac session, going into the London open trading around 0.5995. The NZD popped higher as the USD and US Equity futures came under pressure from a combination of increased trade tension between the US and China and the rise in geopolitical risk as Ukraine launches an unprecedented attack deep inside Russia.

• “China on Monday accused the US of violating their recent trade deal by unilaterally introducing new discriminatory restrictions, rebuking Donald Trump’s claim that Beijing breached the consensus reached in Geneva last month. The rhetoric dims the prospect of a call with Chinese President Xi Jinping this week to further bilateral talks" (BBG)
• MNI BRIEF: China May Manufacturing PMI Remains In Contraction: China's Manufacturing Purchasing Managers Index rose by 0.5 points to 49.5 in May, but remained below the breakeven 50 mark for the second month, data from the National Bureau of Statistics showed Saturday. 
• The NZD continues to trade in a 0.5850/0.6050 range, the hawkish slant from the RBNZ last week has only seen a slight paring back of short positions.
• The support back towards 0.5800/50 has held very well, and while this continues to hold expect buyers to be around on dips. A break above 0.6050 is needed to  provide the spark for the next leg higher.
• CFTC Data showed Asset managers maintaining their shorts, while the leveraged community pared back only a small portion of the decent short they had initiated the week before.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes :  0.6100(NZD375m June 3), 0.5900(NZD401m June 4), 0.5725(NZD600m June 4)

• AUD/NZD range for the session has been 1.0758 - 1.0791, currently trading 1.0765.  A top looks in place now just above 1.0900, the market will have been looking for a more dovish tone from the RBNZ last week and AUD/NZD could now see supply on bounces. The sell zone is back towards 1.0825/50 with the first target being around 1.0650.

  Fig 1: NZD CFTC Data

  

  Source: MNI - Market News/Bloomberg

The AUD/USD has had a range of 0.6433 - 0.6473 in the Asia- Pac session, it is currently trading around 0.6455. The AUD popped higher as the USD and US Equity futures came under pressure from a combination of increased trade tension between the US and China and the rise in geopolitical risk as Ukraine launches an unprecedented attack deep inside Russia.

• AUSTRALIA DATA: "S&P Global Australia May Manufacturing PMI 51 vs 51.7 Prior" - BBG
• "Australia’s inflation gauge fell 0.4% from a month earlier in May bringing annual rate 2.6% y/y from 3.3%, according to the Melbourne Institute Monthly Inflation Gauge and Cost of Living report." - BBG
• “Ukraine attacked Russian airbases with drones destroying 40 bomber planes, according to the BBC. It appears in response to larger Russian attacks on Ukraine recently including Kyiv. Talks are due to start Monday.”(BBG)
• The AUD has struggled to hold onto its early gains and has underperformed in the crosses as US Equity futures stay under pressure.
• Expect buyers to continue 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. A break above 0.6550 and the move higher could begin to accelerate.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD586m), 0.6425(AUD454m), 0.6575(AUD445m). Upcoming Close Strikes : 0.6490(AUD 787m June 5)
• CFTC Data shows Asset managers pared back their shorts ever so slightly, the Leveraged community though added to their shorts quite aggressively over the week.

• AUD/JPY - Today's range 92.53 - 92.85, it is trading currently around 92.60. Range looks 92.00 - 94.00 for now, a sustained break sub 91.50/92.00 will bring focus back to towards the lows again.

  Fig 1: AUD CFTC Data

  

  Source: MNI - Market News/Bloomberg