NZD: Asia Wrap - NZD/USD Reclaims 0.6000 As Risk Reverses
The NZD/USD had a range of 0.5979 - 0.6008 in the Asia-Pac session, going into the London open trading around 0.6005, +0.2%. The NZD has bounced in our session as the timeline for the US to enter the war is pushed out, not sure how far it can go until we get this weekend out of the way and the risk it still presents.
- (BBG): Trump Plans to Decide Within Two Weeks on Whether to Strike Iran. White House spokeswoman Karoline Leavitt said Trump’s message on Thursday is that “based on the fact that there’s a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks.”
- The NZD bounced off the 0.5960 area on this news and has looked to challenge the 0.6000 area again in our session. Can the market completely price out the risk the US still goes in this weekend ?
- Technically while the support around 0.5850 holds in NZD/USD there should be buyers around on dips towards this area. A clear sustained break above 0.6050/0.6100 is needed for the pair to get momentum to push higher.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5830(NZD300m June 23)
- AUD/NZD range for the session has been 1.0805 - 1.0823, currently trading 1.0815. The cross is struggling to get any momentum back above 1.0800, it needs to hold above here and start extending higher to put a higher low in place. A failure to hold up here and the drift lower would be back on.
Fig 1: NZD/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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NZD: Asia Wrap - A Weak USD Helps The Kiwi Get Wings
The NZD/USD had a range of 0.5919 - 0.5950 in the Asia-Pac session, going into the London open trading around 0.5945. The USD has come under pressure straight from the opening this morning and has remained heavy across the board all through our session the NZD has benefited from this.
- MNI - RBNZ: " Business expectations for annual CPI inflation increased across all time horizons. Mean one-year-ahead annual inflation expectations increased from 2.25% to 2.44%. Mean two-year-ahead inflation expectations increased from 2.47% to 2.54%. Mean five-year-ahead and ten-year-ahead inflation expectations increased to 3.06% and 3.94%, respectively. "
- MNI China Press - "The Shanghai Port U.S. West Line for mid-June shipment has reached USD9,100 per 40-foot container, a sharp increase from the USD2,250 offered in early May, Yicai news outlet reported, citing industry insiders.”
- The NZD/USD has been bid all of our session as the USD extended its sell-off after the NZD found some decent demand sub 0.5900 overnight
- The NZD now seems to be comfortable in a 0.5800/0.6050 range and awaits a catalyst to provide the impetus to break-out.
- The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. The first target is the highs just above 0.6000, a break above here could signal a bigger move higher is about to unfold.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5875(NZD349.6m), Upcoming Strikes : 0.5705(NZD805.1m May 23), 0.6150(NZD356.1m May 23), 0.5980(NZD513.4m May26)
AUD/NZD range for the session has been 1.0833 - 1.0851, currently trading 1.0840. The Cross has found some supply just above 1.0900, support is seen back towards 1.0800. A sustained break above 1.0920 is needed to turn the focus higher, until then expect supply on bounces.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
AUD: Asia wrap - Pushes Higher In Asia
The AUD/USD has had a range of 0.6417 - 0.6452 in the Asia- Pac session, it is currently trading around 0.6445. The USD has come under pressure straight from the opening this morning and has remained heavy across the board all through our session. If you want to express a short in the AUD the crosses look a better way to do it.
- Bloomberg - “Australia’s hefty A$1.2b sale of December 2035 debt went off with decent demand metrics. That underscores that the concerns swirling around Japanese and US government bonds at the longer end don’t really resonate for the South Pacific economy given its cleaner fiscal fundamentals.”
- MNI - Expectations of sustained strong pricing at auctions proved accurate, with the latest round of ACGB Dec-35 supply seeing the weighted average yield print 0.55bp through prevailing mids (per Yieldbroker).
- The AUD/USD has seen a decent bounce today, price action against the USD is pretty impressive considering what was thrown at it yesterday. First target looks to be the highs just above 0.6500, a sustained break above here would signal the potential for a larger move higher.
- Expect buyers to be around on dips while the support in the AUD holds, a close back below 0.6300/50 is needed to negate the newly formed uptrend.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6380(AUD300m), Upcoming Strikes : 0.6375(AUD483.6m May 23), 0.6550(AUD480.3m May 23)
AUD/JPY - Today's range 92.56 - 92.90, it is trading currently around 92.65. Decent demand seen towards the 92.50 area where it holds again in our session. A sustained close back below 91.50/92.00 is needed to turn the focus back towards the lows again.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg
STIR: RBA Dated OIS Pricing Much Softer After Yesterday’s RBA Policy Decision
RBA-dated OIS pricing is flat to slightly softer across meetings today as the market continues to digest yesterday’s dovish tilt from the RBA.
- RBA-dated OIS pricing is now 8-20bps softer than yesterday’s pre-RBA levels.
- A 25bp rate cut in July is given a 68% probability, with a cumulative 70bps of easing priced by year-end.
Figure 1: RBA-Dated OIS – Current Vs. Pre-RBA Level
Source: MNI - Market News / Bloomberg
