NZD: Asia Wrap - NZD/USD Pushing Back Above 0.6000, Can It Put A Base In?
The NZD/USD had a range of 0.5985 - 0.6014 in the Asia-Pac session, going into the London open trading around 0.6015, +0.20%. The pair had a decent move higher in the New York session as the USD came back under pressure with US yields pushing lower. Depending what your view is this 0.6020/0.6050 area looks an attractive fade, the danger though is the USD which is looking sickly once more and should it capitulate the NZD could build momentum higher again. Price will need a sustained break back above the 0.6025/50 area to signal a potential base might be in place.
- Satish Ranchhod(Westpac) on LinkedIn: “Inflation in New Zealand has picked up to 2.7%, and it’s on course to rise back up to around 3% by the end of this year, it’s a mixed picture under the surface. With softness in demand, we are seeing lower inflation in parts of the domestic economy, especially the housing sector. However, we’re continuing to see large increases in administered prices like council rates and electricity charges. At the same time, import prices are starting to push higher again. We continue to expect another 25bp cut from the RBNZ in August. However, with headline inflation pushing higher, the RBNZ will be cautious about the extent and timing of any further rate cuts.”.
- (Bloomberg) -- RBNZ publishes new residential mortgage lending data for June, on its website. Lending to all borrowers NZ$8.26b, Gains 47% y/y, Increases 3.5% m/m after seasonal adjustment: RBNZ.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6010(NZD302m July 24). - BBG
- CFTC Data shows Asset Managers slightly reduced their newly built longs in NZD +8192, the Leveraged community has continued to reduce their shorts last week -6744.
- AUD/NZD range for the session has been 1.0915 - 1.0940, currently trading 1.0920. The cross moved higher in response to the NZ CPI. Dips back to 1.0850/1.0900 should continue to find support as the pair tries to build momentum to move higher.
Fig 1: NZD/USD Spot 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
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FOREX: Asia FX Wrap - Reasons For A USD Correction Mount
The BBDXY has had a range of 1211.64 - 1215.21 in the Asia-Pac session, it is currently trading around 1214.80. The BBDXY has opened higher this morning, breaking through the 1213.00 area in reaction to the US bombing and the implications of potential extended US involvement in the conflict. The Market is caught short USD’s and the reasons for a retracement are beginning to mount. Brian Sullivan on X: ”It's not just the price of oil that's a concern, but also the cost of SHIPPING oil. Oil Brokerage Ltd. tells me that VLCC (very large crude carrier) ship rates near Persian Gulf could hit $100/k per day if disruption in Straight of Hormuz. For comparison, it was $24k/day just 10 days ago.”
- EUR/USD - Asian range 1.1456 - 1.1508, Asia is currently trading 1.1495. EUR has rejected the move above 1.1600 but dips should continue to find demand, first support back towards the 1.1400 area then 1.1100/1200. Price action does suggest we could test the support, the EUR has outperformed against both the AUD and NZD in Asia.
- GBP/USD - Asian range 1.3400 - 1.3442, Asia is currently dealing around 1.3415. The GBP continues to hold just above its support around 1.3400 after failing to break the Weekly 1.35/36 pivot. A sustained move back below 1.3400 and we could see a deeper correction unfold.
- USD/CNH - Asian range 7.1799 - 7.1921, the USD/CNY fix printed 7.1710. Asia is currently dealing around 7.1875. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX -0.25%, Gold $3360, US 10-Year 4.39%, BBDXY 1215, Crude oil $75.25
- Data/Events : Ger HCOB PMI's, FRA HCOB PMI's, EZ HCOB PMI's
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
NZD: Asia Wrap - NZD/USD Fails Above 0.6000 As The USD Bounce Builds Momentum
The NZD/USD had a range of 0.5918 - 0.5966 in the Asia-Pac session, going into the London open trading around 0.5925,-0.70%. The NZD has remained under pressure after gapping lower on the Asian open. The market is digesting the implications of a longer and more sustained US involvement in the conflict and how Iran might react to this, potentially blocking the Strait of Hormuz.
- (Bloomberg) - “New Zealand’s dollar is particularly vulnerable in the event of a haven rally in the US currency should the conflict between Iran and Israel pose constraints on oil supply, according to Bank of America Corp.”
- “Among Group-of-10 commodity currencies, the Kiwi “is the only energy importer and most vulnerable if Middle East oil supply is impacted more severely,” wrote Bank of America.”
- The NZD could not get back above 0.6000 on Friday and this morning has seen another wave of selling as the market digests the weekend's news and the implications of what further US involvement might imply.
- Technically while the support around 0.5850 holds in NZD/USD it is still in an uptrend but should risk start to come under more significant pressure the market is likely to test this.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5830(NZD300m June 23). Upcoming Close Strikes : 0.5690(NZD621m June 25)
- CFTC Data showed Asset managers paring back their shorts slightly once more over the week, the leverage community did likewise.
- AUD/NZD range for the session has been 1.0797 - 1.0828, currently trading 1.0810. The cross is struggling to get any momentum back above 1.0800 for now, it needs to hold above here and start extending higher to put a higher low in place. The longer it fails to extend higher the more likely it begins to drift lower again, a break sub 1.0750 will see downward momentum return.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
JPY: Asia Wrap - USD/JPY Eyes Oil And Is Challenging A Market Long JPY
The Asia-Pac USD/JPY range has been 146.15 - 146.91, Asia is currently trading around 146.90, +0.55%. USD/JPY has broken through the 146.50 area this morning in reaction to the US bombing and the implications of potential extended US involvement in the conflict. The Market is caught long JPY and the implications of even higher oil prices as Iran contemplates blocking the Strait of Hormuz is challenging their conviction.
- “Pimco has been buying long-term JGBs to take advantage of a “dislocation” in the market, Andrew Balls told the FT, adding there’s a strong case for authorities to “issue more in the parts of the curve where the demand is.”(BBG)
- "HAYASHI: NOT TRUE US DEMANDED 3.5% GDP ON DEFENSE SPENDING" - BBG
- USD/JPY price action continues to point to a market that is positioned long JPY.
- "Asian currencies are likely to see further downside in the near-term, amid rising vulnerability to oil prices"(BBG).
- USD/JPY price action continues to point to a market that is positioned long JPY.
- Having broken above 146.50 this morning the market will be closely watching the oil price for short-term clues.
- The market is positioned for a move lower in USD/JPY and with this positioning at extremes we have seen the risk of pullbacks increase. A sustained break above 146.50/147.00 would begin to challenge the conviction of these shorts and focus will return to the 150.00/151.00 area.
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.50($323m).Upcoming Close Strikes : 144.50($1.34b June 25)
- CFTC data shows Asset managers maintained their already extensive JPY longs, while leveraged funds have pared back their own longs that had just begun to be rebuilt.
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
