USDJPY: Asia Wrap - USD/JPY Support Holds, Consolidates On 147 Into US PPI

NZGBs closed little changed, with benchmark yields flat t 1bp higher, after a subdued start to the trading week. 

• Cash US tsys were closed during today’s Asia-Pac session, with Japan out for a holiday.
• Swap rates closed unchanged.
• With the next RBNZ meeting approaching (August 20), this week contains a number of high frequency releases that the MPC monitors and should give a sense for how the economy began Q3.
• July card spending is out Wednesday and while it is off its lows, growth has remained soft. There could be some payback in the month following the 0.5% m/m rise in June.
• On Friday, July monthly price series are released including food, travel, electricity and rents. Food and power price inflation have been trending higher while petrol and rents have been moderating.
• The July BNZ manufacturing PMI also prints on Friday. It returned to contractionary territory in May after five months signalling growth in the sector. In June, the pace of decline moderated with the index at 48.8 after 47.4.
• RBNZ dated OIS pricing closed unchanged across meetings. 23bps of easing is priced for August, with a cumulative 41bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond and NZ$250mn of the 2.75% Apr-37 bond.

The NZD/USD had a range of 0.5944 - 0.5962 in the Asia-Pac session, going into the London open trading around 0.5955, -0.02%. Risk has traded a little higher this morning, E-minis +0.20%, NQU5 +0.20%. NZD/USD bounced nicely off its 0.5850 support last week but depending on your view I would suspect sellers could return on any bounce back toward 0.6000/0.6050. For the moment firmly back in the 0.5850-0.6100 range looking for a catalyst to break and give clearer direction, US CPI tomorrow is an important input.

• "NZ'S LUXON: SEEING A TWO-SPEED ECONOMIC RECOVERY IN NZ, LAST THREE MONTHS HAVE BEEN CHALLENGING FOR ECONOMY. EXPECT FUTURE INTEREST RATE CUTS" - BBG
• MNI NZ: July Data Releases Ahead Of August RBNZ Meeting. With the next RBNZ meeting approaching (August 20), this week contains a number of high frequency releases that the MPC monitors and should give a sense for how the economy began Q3. July card spending is out Wednesday and while it is off its lows, growth has remained soft. There could be some payback in the month following the 0.5% m/m rise in June. On Friday, July monthly price series are released including food, travel, electricity and rents. Food and power price inflation have been trending higher while petrol and rents have been moderating.
• Kelly Eckhold(Westpac NZ) on LinkedIn - “Something to keep an eye on is the possibility that the reciprocal tariffs NZ got lumped with last week get removed by the courts. Sounds very possible as Trump is operating beyond his legal authority.”
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.5920(NZD583m), 0.5930(NZD646m), 0.5960(NZD301m). Upcoming Close Strikes :  0.5825(NZD300m Aug 14). - BBG
• CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
• AUD/NZD range for the session has been 1.0929 - 1.0960, currently trading 1.0940. The Cross continues to trade sideways after stalling towards the 1.1000 area once more. The range looks to be 1.0850-1.1000 for now.

Fig 1: NZD CFTC Data

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

The Asia-Pac USD/JPY range has been 147.43 - 147.79, Asia is currently trading around 147.45, -0.20%. USD/JPY is consolidating within a 146.50-148.00 range. Price has moved very quickly away from the pivotal 151/152 area much to the relief of Institutional Yen longs and the BOJ. Price is holding above the support area between 146.00/147.00, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate. US CPI tomorrow night will be an important input.

• MNI JAPAN: Ishiba Maintains Intention To Remain PM As LDP Critics Threaten Recall. The governing Liberal Democratic Party (LDP) has concluded a two-hour meeting of lawmakers from both houses of the National Diet. The formal reason for the assembly was to assess the fallout from the 20 July House of Councillors election, in which the LDP-Komeito governing coalition lost its majority in the upper chamber. However, the meeting was also a chance for LDP lawmakers to voice their displeasure with PM Shigeru Ishiba, whose critics blame for the party's poor performance.
• (Bloomberg) -- “Data on Japanese bond buying show a “deliberate realignment of Japanese portfolio investment away from US sovereign debt and toward the sovereign markets of the eurozone,” according to strategists at Mizuho.”
• “Carry traders are piling into high-yielding EM currencies as wagers on Fed rate cuts weaken the dollar.” - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 147.00($470m).Upcoming Close Strikes : 150.25($1.47b Aug 13) - BBG.
• CFTC data shows asset managers reduced their JPY longs +60532( Last +75119), leveraged funds slightly reduced their newly built short JPY position -29308(Last -31280).

Fig 1 : JPY CFTC Data

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