AUD: Asia Wrap - RBA Surprises Market Helping The AUD To Bounce
The AUD/USD has had a range of 0.6491 - 0.6558 in the Asia- Pac session, it is currently trading around 0.6540, +0.75%. The pair has popped higher as the RBA surprised the market by holding rates at 3.85% when a cut was almost fully priced in by the market. This has seen the AUD/USD almost completely erase all its losses from yesterday, where it trades from here will now depend on the fortunes of the USD going forward.
- ”The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong. Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply. The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis.” - (BBG)
- (Bloomberg) -- Japanese investors bought the largest amount of Australian sovereign bonds in two years in May, according to the Asian nation's latest balance-of-payments data. Net purchases totaled ¥213.6 billion, the most since April 2023, and followed four months of selling
- The AUD/USD has bounced strongly off its support around 0.6500, back to the 0.6500 - 0.6600 range for now as it will now take its cues from the USD, a break of 0.6600 could signal a move back towards 0.6900/0.7000.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6435(AUD904m), 0.6375(AUD 722m), 0.6545(AUD 493m). Upcoming Close Strikes : 0.6425(AUD700m July 9), 0.6300(AUD866m July 8)
- CFTC Data shows Asset managers pared back their shorts slightly -35992, the Leveraged community maintained their shorts -22903.
- AUD/JPY - Today's range 94.73 - 95.69, it is trading currently around 95.50, +0.70%. The pair found solid demand back towards 94.00 which stands out considering risk traded lower overnight. The range looks to be 93.50 - 96.00 a break above 96.00 could see a further paring back of AUD/JPY shorts.
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
We've just published our UST Issuance Deep Dive - Download Full Report Here
- May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
- The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
- Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
- Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
- May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.
- Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
- There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
