NZD: Asia Wrap - NZD/USD Stalls ahead Of 0.6000
The NZD/USD had a range of 0.5975 - 0.5990 in the Asia-Pac session, going into the London open trading around 0.5980, -0.10%. US stocks finally paused for a breath ahead of the FOMC, but the USD can’t catch a break and looks to be breaking lower even before the market hears from Powell. The USD continues to extend lower, which is supporting the NZD. A close back above 0.6000 would negate any semblance of the downward pressure it was exhibiting, but for those that have a bearish view this remains a decent entry point to express that, the FOMC tomorrow morning could be the catalyst needed for a clearer direction.
- MNI AUS - NZ Q2 GDP Forecast At -0.3% q/q But Some Locals Expect A Deeper Drop. Q2 GDP prints on Thursday, 18 September and Bloomberg consensus is forecasting it to contract 0.3% q/q in line with the RBNZ’s projection in August. The goods-producing sector was particularly weak over the quarter. The central bank said that activity stalled in Q2 driven by weaker business and consumer sentiment following the US’ announcement of higher tariffs. Chief Economist Conway noted that the data in July signalled that the recovery looks to have continued in Q3.
- "NZ’s Willis Says Economic Growth Is Picking Up After 2q stutter, acknowledges GDP report is expected to show 2q contraction" - BBG
- MNI AUS - “Current Account Deficit Lowest In 4 years: There was a sharp narrowing in the Q2 YTD NZ current account deficit as a share of GDP with it printing at 3.7% after 4.2% and the peak in Q4 2022 of 9%. Q1 was revised sharply lower at $0.709bn (nsa) and 4.2% of GDP from $2.324bn and 5.7%. The deficit in Q2 widened marginally to $0.97bn (nsa) but seasonally adjusted it narrowed $0.7bn driven by a smaller primary income deficit.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5825(NZD1.01b Sept 17), 0.5900(NZD860m Sept 17), 0.5935(NZD537m Sept 18) - BBG
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUD: Asia Wrap - AUD/USD Pushes Off 0.6500
The AUD/USD has had a range of 0.6507 - 0.6521 in the Asia- Pac session, it is currently trading around 0.6520, +0.18%. US Equities momentum higher seemed to stall and the USD drifted lower again into the weekend. The AUD continues to consolidate around 0.6500, firmly in the middle of its 0.6350-0.6650 range with no clear direction. Risk has opened trade a little firmer in our session E-minis +0.15%, NQU% +0.25%.
- AU MNI: Productivity Roundtable This Week, Also Survey Data. The federal government’s productivity round table will be held this week from August 19 to 21 with RBA Governor Bullock scheduled to speak on the first day. In the August RBA press conference, she said that she will speak on how increasing productivity growth improves economic resilience. In terms of data, the focus will be on survey releases.
- (AFR - Mark Trevarthen) "Having witnessed at close quarters the changing behaviour of bond markets across four decades now, it has become increasingly clear that Australia has matured into a high-quality destination, and the market is expanding to reflect this, not only through the broader range of corporates coming to the market to issue Australian dollar bonds, but also the wider investor base beyond Australian shores, with offshore participation in primary issuance and the secondary market increasing significantly in the past year."
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6475(AUD541m), 0.6500(AUD424m), 0.6575(AUD395m). Upcoming Close Strikes : 0.6515(AUD744m Aug 19), 0.6600(AUD1.34b Aug 21) - BBG
- CFTC Data shows Asset managers added to their shorts -67449(Last -60729), the Leveraged community though reduced their own shorts -10121(Last -13997).
- AUD/JPY - Asia-Pac range 95.77 - 96.15, Asia is trading around 96.10. The pair found good demand last week towards 95.50, price is now firmly back into the 94.50-97.50 range looking for clearer direction.
Fig 1: AUD CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
GOLD: Bullion Higher, European Leaders Meet Trump Later
After range trading on Friday, gold is 0.5% higher today at $3351.2/oz, close to the intraday high of $3351.81. It appears to have been supported by slightly lower US yields and greenback, and possibly also by some doubt regarding the prospects for a Ukraine peace deal. Russia is demanding the Donbas, not all of which it currently occupies, while Ukraine is not prepared to cede territory, especially if unoccupied. Ukraine’s President Zelenskyy and other European leaders meet with US President Trump today.
- Silver is up 0.3% to $38.120, close to today’s peak of $38.138. It fell to $37.820 early in trading.
- Equities are generally stronger with the S&P e-mini up 0.1%, Hang Seng +0.6%, Nikkei +0.9% but KOSPI down 1.1%. Oil prices are slightly higher with WTI +0.1% to $62.90/bbl. Copper is up 0.1%.
- Later the Fed’s Bowman speaks. In terms of data, euro area June trade and August US NY services & NAHB housing indices print.
US TSYS: Asia Wrap - Yields Leak Lower
The TYU5 range has been 111-19 to 111-24 during the Asia-Pacific session. It last changed hands at 111-23+, up 0-04+ from the previous close.
- The US 2-year yield has edged lower trading around 3.742%, down 0.01 from its close.
- The US 10-year yield has edged lower trading around 4.304%, down 0.01 from its close.
- Yields extended higher on Friday, approaching the pivotal resistance area within the greater 4.10%-4.65% range. The 4.35% area in 10-Year yields should still see demand initially, but the way the market keeps bouncing off levels just below 4.20% will be disconcerting for longs..
- Fortune - “Wall Street overwhelmingly expects the Federal Reserve to cut rates next month, and Chairman Jerome Powell’s speech on Friday will give him a chance to hint at which direction policymakers are headed. But some analysts don’t think a September rate cut is in the bag, and even some that do expect a cut are doubtful that Powell will tease it at Jackson Hole.”
- Daily Chartbook on X: "On the surface: steady and solid consumer momentum. Under the hood: a rising share of sales growth is being 'paid for' by inflation."@Econ_Parker. See Fig.1 Below.
- Data/Events: New York Fed Services Business Activity, NAHB Housing Starts
Fig 1: Retail & Inflation
Source: MNI - Market News/@dailychartbook/Arch
