NZD: Asia Wrap - NZD/USD Struggling To Hold Above 0.6000
The NZD/USD had a range of 0.6011 - 0.6055 in the Asia-Pac session, going into the London open trading around 0.6015. The NZD has failed to hold onto its gains above 0.6050 and drifted lower all day. The move lower has been a reaction to weaker Chinese data and US Equity futures trading poorly in our session. The Bulls will be hoping demand can keep it on a 0.6000 handle to build for another attempt.
- China's May CAIXIN PMI contracted in May, surprising forecasters. May's result of +48.3 was materially down from +50.4 in March and a surprise to market surveys predicting a rise to +50.7.
- NEW ZEALAND: Terms Of Trade Rises Again, Strong Export Volume Growth. While the Q1 merchandise terms of trade rose less than expected at 1.9% q/q, it was the fifth straight monthly increase after it was up 3.2% in Q4. Statistics NZ notes that the softer kiwi “contributed” to higher export and import prices. Export volumes rose solidly for the second straight quarter boosted by dairy products and should be a positive in Q1 GDP when it is released on June 19.
- The NZD is attempting to break out its recent range, the hawkish slant from the RBNZ last week only saw a slight paring back of short positions. Should the NZD sustain a clear break back above 0.6050 you could see some of these reduced even further.
- The support back towards 0.5850 has held very well, and while this continues to hold expect buyers to be around on dips. A clear break above 0.6050 could provide the spark for the next leg higher.
- CFTC Data showed Asset managers maintaining their shorts, while the leveraged community pared back only a little of the decent short they had initiated the week before.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6100(NZD375m). Upcoming Close Strikes : 0.5900(NZD401m June 4)
AUD/NZD range for the session has been 1.0727 - 1.0770, currently trading 1.0755. 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/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg
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USDCAD TECHS: Hits Bear Trigger, New Cycle Low
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4087 50-day EMA
- RES 1: 1.3906/3935 High Apr 17 / 20-day EMA
- PRICE: 1.3793 @ 17:00 BST May 2
- SUP 1: 1.3760 Low Apr 21 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend set-up in USDCAD deteriorated further Friday, with prices slipping through the bear trigger to narrow the gap with next support. The fresh cycle low reinforces the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3943, the 20-day EMA.
AUDUSD TECHS: Consolidation Phase
- RES 4: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6528 High Nov 29 ‘24
- RES 2: 0.6471 High Dec 9 ‘24
- RES 1: 0.6470 High May 2
- PRICE: 0.6445 @ 16:59 BST May 2
- SUP 1: 0.6344/6316 Low Apr 24 / 50-day EMA
- SUP 2: 0.6181 Low Apr 11
- SUP 3: 0.6116 Low Apr 10
- SUP 4: 0.5915 Low Apr 9 and key support
AUDUSD remains inside a consolidation phase, having traded either side of the 0.6400 level for 10 consecutive sessions. The underlying trend remains bullish and the pair is trading close to recent highs. Price has recently breached a key resistance at 0.6409, the Dec 9 ‘24 high. This breach reinforces bullish conditions and signals scope for a continuation higher near-term. Sights are on 0.6471 next, the Dec 9 2024 high. Initial key support to monitor is 0.6316, the 50-day EMA. A clear break of this EMA would be a concern for bulls.
US TSYS: Rates Retreat, Sentiment Improved Though Trade Risk Remains
- Treasuries look to finish near late Friday session lows after trading firmer on the open, higher than expected Nonfarm payrolls at 177k (sa, cons 138k) of which private contributed 167k (sa, cons 125k) triggered the early reversal.
- However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs -48k two-month revision).
- Stocks are back near four week highs - pre-"Liberation Day" levels as hopes of some trade deal being made improved sentiment.
- The Wall Street Journal reports that "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start." The Journal notes that "discussions remain fluid" and China "would like to see some softening of stance from President Trump".
- Currently, the Jun'25 10Y contract trades -20 at 111-07.5 vs 111-02 low -- initial technical support (50-dma) followed by 110-16.5/109-08 (Low Apr 22 / 11 and the bear trigger). Curves bear flattened, 2s10s -3.480 at 48.002, 5s30s -4.911 at 86.807.
