NZD: Asia Wrap - Quiet Session As NZD Tries To Hold 0.6000

EXECUTIVE SUMMARY

• At its May 1 meeting, the Bank of Japan (BoJ) voted unanimously (9-0) to maintain its policy rate at 0.5%, citing increasing risks of a global economic slowdown, particularly in light of escalating US tariffs.
• In its Outlook Report, the BoJ downgraded its forecasts for real GDP growth and core inflation. The central bank also delayed its expected timeline for achieving its 2% inflation target.
• Despite the overall dovish shift, Governor Kazuo Ueda attempted to maintain a degree of flexibility in future policy moves. In his post-meeting press conference, Ueda emphasised that a delay in reaching the inflation target does not necessarily imply a delay in future rate hikes.
• The BoJ now appears to be in a more reactive posture, allowing for flexibility in response to global developments rather than committing to a predetermined tightening path.
• Reflecting the shift in the BoJ’s focus from domestic inflation to external risks, some market analysts have revised their expectations for the timing of the next rate hike. While earlier forecasts anticipated a move in the third quarter of 2025, this has now been postponed to the fourth quarter.
• In summary, the BoJ’s May meeting highlighted a more cautious and data-dependent approach amid mounting global uncertainties.
• Full review here: 

The Asian session started off on the back foot with Trump commenting that he had “no plans to talk to Xi this week.” This weak start then got legs as we saw another huge leg lower in USD/Asia driven by the USD/TWD, which caused the USD to trade lower across the board. Asian holidays and thin liquidity have not helped but almost 8% in 2 days is an extreme event and you would expect buyers to reemerge sub 30.00.

• AUD/USD - Asian range 0.6434 - 0.6481, the AUD is currently dealing around 0.6460. The AUD popped up around 40 points on the USD/TWD open and has since drifted back off its highs as bids below 30.00 finally materialize in USD/TWD . The AUD looks to be building a solid bad base from which to move higher again, first target the 0.6600 area. A break below 0.6350 needed to negate this.
• AUD/JPY - Asian range 93.12 - 93.51, price goes into London trading around 93.25.  AUD/JPY has had a powerful extension as shorts are pared back. Price is now moving towards testing the Weekly resistance seen between 94.00/96.00, sellers should remerge here.
• NZDUSD - Asian range 0.5940 - 0.5985, going into London trading around 0.5970. Like the AUD it benefited from the move lower in USD/TWD upon its open. On the day dips back to 0.5900 should continue to find support.
• AUD/NZD - Asian range 1.0814 - 1.0853, the Asian session currently trading 1.0825. Sellers have returned back towards the 1.0850 area.

Fig 1 : AUD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg

TYM5 has traded higher within a range of 111-06+ to 111-13+ during the Asia-Pacific session. It last changed hands at 111-08, up 0-03 from the previous close.

• Futures are trading higher as another huge leg lower in USD/Asia driven by the USD/TWD drives price action in Asia. “Some speculation that Taiwanese life insurers hedging strategies for their US bond holdings may be responsible.”(per BBG)
• No cash market today with a holiday in Japan. 
• Trump says - “NO PLANS TO TALK TO XI THIS WEEK, CHINA AND US OFFICIALS TALKING ABOUT 'DIFFERENT THINGS'”.(per BBG)
• Kato : “We are not considering the sale of US Treasuries as a means of Japan-US negotiations,” Kato spoke in Milan, Italy on Sunday, where he is attending the annual meeting of the Asian Development Bank.(per BBG)
• The 10-year Yield range seems to be 4.10% - 4.45%, with the pivot the 4.30% area for now.
• ISM Services data tonight will be important and will dictate price action tonight. Any move back towards a contraction will get the market worried about growth once more.
• Data/Events :  US ISM Service PMI