NZD: Asia Wrap - NZD/USD Edges Lower On Canada Tariff, Testing 0.6000 Support

NZGBs closed showing a twist-flattener, with yields 2bps higher to 1bp lower.

• Bloomberg - "New Zealand's annual net immigration fell to 21,317 in April, a two-and-a-half-year low, which could slow the country's economic recovery and lead to more interest-rate cuts."
• "The decline in net immigration is partly driven by New Zealand citizens leaving the country to seek better incomes, which could dampen demand and prompt the Reserve Bank to provide policy stimulus."
• Cash US tsys are little changed in today's Asia-Pac session ahead of today's CPI data.
• Focus has also been firmly on US-China trade talks, with headlines from London crossing earlier. The market reaction has been fairly muted, with the main outcome being agreement to move forward with what was agreed at the Geneva talks in May (although both US and Chinese leaders need to sign off on implementation).
• Swap rates closed showing a flatter curve, with yields 2bps higher to 2bps lower.
• RBNZ dated OIS pricing closed firmer across meetings. 4bps of easing is priced for July, with a cumulative 27bps by November 2025.
• Tomorrow, the local calendar will see Card Spending data, ahead of BusinessNZ Manufacturing PMI on Friday.

The Asia-Pac USD/JPY range has been 144.66 - 145.16, Asia is currently trading around 145.00. USD/JPY has had a muted session trading around some decent Option interest in the 145.00 area.

• Japan's May PPI was below market expectations, falling 0.2% m/m (against a +0.2% forecast). April's rise was revised to +0.3% (from 0.2%). In y/y terms, we printed 3.2%, against a 3.5% forecast (prior was 4.1%). In terms of the detail, manufacturing PPI was down 0.4%m/m. Weakness was evident in commodities, particularly petroleum, coal (-4.8%m/m). Iron ore and steel were also down in m/m terms. Import prices for commodities were down 1.1%m/m, continuing a negative trend, now off 10.3% in y/y terms.
• (Dow Jones) - “October may be the last chance for the Bank of Japan to raise interest rates, says Norinchukin Research Institute economist Takeshi Minami. Consumer inflation is expected to slow in the summer and slip below 2% after the start of 2026, he says.”
• Some large option interest around these levels has seen it do some work around 145.00.
• The market still seems very confident of a move lower in USD/JPY but with positioning quite large now we have seen the risk of pullbacks increase.
• With the failure to break below 142.00 last week, price is back in its recent 142.00 - 147.00 range and will need a break either side of that to get a clearer direction. US CPI tonight will dictate price action. Expiries below show a lot of interest around the 145.00 area.
• Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($1.14bm). Upcoming Close Strikes : 143.00($1.28b June 12), 140.00($1.22b June 12), 145.00($4.54b June 16).

• CFTC data shows Asset managers maintained their already extensive JPY longs, and leveraged funds try again to build their own longs.

  Fig 1 : USD/JPY Spot Daily Chart

  

  Source: MNI - Market News/Bloomberg Finance L.P

Gold has ticked higher in the first part of Wednesday trade, last near $3341-42/oz, up around 0.50% versus end Tuesday levels in the US. This comes despite an uptick in the USD, with the BBDXY index around 0.1% stronger so far today. Focus has been firmly on US-China trade talks, with headlines from London crossing earlier. The market reaction has been fairly muted, with the main outcome being agreement to move forward with what was agreed at the Geneva talks in May (although both US and China leaders need to sign off on implementation). 

• US equity futures have edged down, with the market perhaps looking for something more around broader tariff relief. This may be helping gold at the margins, although most regional equity markets in Asia Pac are firmer in Tuesday trade.
• For gold techs, the bullish theme remains intact with moving-average studies staying in a bull mode. Initial resistance is at $3403.5, 5 June high with the bull trigger at $3500.1. Initial support is at $3242.4, 50-day EMA.