US TSYS: Asia Wrap - Quiet Session As Bonds Consolidate Overnight Move

• China's bond futures are all higher today as the data suggests that any momentum in house prices and property investment may be stalling.
• The 10Yr future is up +0.03 at 109.03 and remains above all major moving averages.  The nearest being the 20-day EMA at 108.88
• The 2Yr future is up +0.02 at 102.47 and is at the mid-point of the 20-day EMA at 102.43 and the 50-day EMA at 102.50
• The 10YR CGB is marginally lower in yield today at 1.69%

The AUD/USD has had a range of 0.6467 - 0.6496 in the Asia- Pac session, it is currently trading around 0.6475. The AUD has drifted a little lower for most of our session, -0.2%. 

• Consensus Expects Labour Market Remained Tight In May. The highlight of the week, which doesn’t include many events, will be May jobs data. Bloomberg consensus is expecting that the status quo continued last month with Australia’s labour market remaining tight. A 20k rise in new jobs is forecast, in line with the 3-month average, with the unemployment and participation rates stable at 4.1% and 67.1% respectively.
• The AUD did well to hold above 0.6450 as risk came under pressure during the Friday session. The USD is still struggling to find any traction and as a result it still probably makes more sense to express any AUD weakness via the crosses until that changes.
• Price remains in the 0.6350 - 0.6550 range, a sustained break above 0.6550 is needed for the move higher to accelerate.
• Expect buyers to continue to be around on dips while the support in the AUD/USD holds, a close back below 0.6350 is needed to challenge the newly formed uptrend. 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6560(AUD549m), 0.6455(AUD476m). Upcoming Close Strikes : 0.6600(AUD 974m June 18)
• CFTC Data shows Asset managers maintaining their shorts, the Leveraged community though continued to build up their shorts again.

• AUD/JPY - Today's range 93.34 - 93.89, it is trading currently around 93.45. The price has topped out again towards 94.00 this morning after a big bounce off 92.50 overnight. A break back below 91.50/92.00 is needed to see the move lower regain momentum and the focus turn back to the year's lows again.

  Fig 1: AUD CFTC Data

  

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

At the time of writing, BoJ-dated OIS pricing was 4–17bps softer across meetings compared to pre-March MPM levels, reflecting growing concerns over economic growth, driven largely by recent external shocks, particularly changes in US tariff policy.

• The BoJ is expected to keep its policy rate unchanged at 0.50% at its June 16-17 meeting. The key area of interest will be Governor Kazuo Ueda’s post-meeting press conference. Investors will closely examine his comments for any signals on the timing and likelihood of future rate hikes. The second area of market focus is on the BoJ’s JGB purchase program. 
• Markets are positioned for a cautious, wait-and-see approach from the BoJ at this meeting.
• Current OIS pricing implies just a 2% probability of a 25bp hike this week, rising to 25% by September and 67% by December — a notable shift from mid-February, when a hike by September was fully priced in.
• For comparison, the market had been assigning a 47% chance of a September hike and a 62% probability by October going into the May 1 MPM decision.

Figure 1: BoJ-Dated OIS – Today Vs. Pre-March MPM 

Source: Bloomberg Finance LP / MNI