AUD: Asia Wrap - Risk Currencies Knee-Jerk Lower
The AUD/USD has had a range of 0.6457 - 0.6533 in the Asia- Pac session, it is currently trading around 0.6480. The AUD has been under large pressure for most of our session as the risk-on move unravels on the back of a wave of airstrikes currently being carried out on Iran. The knee-jerk move lower in risk currencies like the AUD and NZD was swift and has continued to trade heavy while risk looks like its correction could have more to play out.
- "Iran Says to Respond ‘Harshly’ Against US, Israel Over Attacks. Iran’s Armed Forces spokesperson Abolfazl Shekarchi says “the Zionist regime and the US will receive a harsh blow,” in response to Israel’s attacks earlier Friday. " - BBG
- The AUD/USD has capitulated back below the 0.6500 area just as it looked likely to break higher. The inability to break above 0.6550 on multiple occasions now will have some bulls a little concerned.
- Price back in the middle of the 0.6350 - 0.6550 range, a sustained break above 0.6550 is needed for the move higher to accelerate. How the USD trades on this news will be key to how we move forward from here, can it bounce with oil and as a safe haven ?
- Expect buyers to continue to be around on dips while the support in the AUD holds, a close back below 0.6350 is needed to challenge the newly formed uptrend. How far this correction in US stocks goes will determine the likelihood of this support holding.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD450m). Upcoming Close Strikes : 0.6560(AUD 549m June 16), 0.6455(AUD426m June 16)
AUD/JPY - Today's range 92.32 - 93.83, it is trading currently around 92.95. Price has turned quickly lower again this morning as risk unravels. A clear lower high in place now and AUD/JPY looks set to test its support. A break back below 91.50/92.00 will see the move lower regain momentum and the focus will turn to the year's lows once more.
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
STIR: RBNZ Dated OIS Pricing Firms Since CPI But Much Less Than AUS
RBNZ-dated OIS pricing is flat to 3bps firmer across meetings today, leaving rates 2–14bps above levels seen prior to the Q1 CPI release on April 17.
- Q1 New Zealand CPI came in hotter than expected at 0.9% q/q, lifting the annual rate to 2.5% from 2.2% in Q4. Both tradeables and non-tradeables components contributed to the upside surprise.
- However, the RBNZ’s preferred measure of underlying inflation—the sectoral factor model—edged lower to 2.9% in Q1, down from a downwardly revised 3.0% in Q4. This marks the lowest print since Q2 2021 and places core inflation just under the top of the RBNZ’s 1–3% target band.
- In Australia, Q1 headline and underlying CPI exceeded expectations by 0.1pp, although the trimmed mean slowed to 2.9% y/y, falling within the RBA’s target band for the first time since Q4 2021.
- For comparison, RBA-dated OIS pricing is now 4–40bps firmer than pre-Q1 CPI levels recorded on April 30.
Figure 1: RBNZ Dated OIS Current vs. Pre-CPI Levels (%)
Source: MNI - Market News / Bloomberg
CHINA: Bond Futures Lower in Morning Trade
- China's bond futures are all lower in morning trading.
- The 10YR future is lower by -0.10 at 108.56 and has breached the 50-day EMA of 108.59. The next key level below is the 100-day EMA of 108.32.
- The 2YR future is lower by -0.05 at 102.46 and remains firmly below all major moving averages. The nearest being the 20-day EMA at 102.46.
- CGB bond yields are stable with the CGB 10YR at 1.66%
MNI EXCLUSIVE: Insight On German FDI Into CHina
