FOREX: AUDJPY Proving Resilient, Threatens Stronger Recovery
Mar-27 10:07
- Latest tariff developments, and the initial weakness for major equity indices, had little effect on AUDJPY late Wednesday, usually one of the best barometers of risk sentiment in FX. We flagged yesterday that the cross-asset price action with equities is another reminder that the intraday stocks x Cross/JPY correlation remains inconsistent.
- Coinciding with the key resistance for USDJPY noted above at 150.95, AUDJPY is also testing its 50-day EMA, which intersects ~95.20. Importantly, we have not closed above this average since January.
- A break above would mark a further signal that the bear phase off the year's high may have concluded. The cross would then quickly encounter downtrend resistance (drawn from the July ’24 high) around 95.50, and the March high at 95.75. Above here, the February highs at 97.33 would be a notable target for a more protracted recovery.
- Notably, AUD also shrugged off the softer-than-expected Australia CPI data this week, with the next calendar highlights being the Melbourne institute’s inflation gauge and retail sales, both due early next week.
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EUROZONE DATA: Q4 Negotiated Wages Deceleration Confirms Forward Looking Tracker
Feb-25 10:06
The ECB’s indicator of negotiated wages eased to 4.12% Y/Y in Q4 (vs 5.43% prior, revised from 5.42% initial). Analyst estimates we had seen ahead of the release ranged from 4.1%-5.0%. The data is unlikely to be a needle mover for the ECB, with policymakers more focused on the signals from the bank’s forward-looking wage tracker, which points to a solid deceleration in compensation ex-one offs through this year.
- The chart below indicates that the forward-looking tracker has done a good job of predicting actual negotiated wage growth over the last few quarters.
- A moderation in labour costs underscores ECB confidence in the inflation outlook, with services expected to start seeing more meaningful disinflation below 4% in the next few months.
- The Eurozone February flash inflation round begins on Thursday with national level data from Spain. The Eurozone-wide release is next Monday. MNI's full preview will be out tomorrow.
EURIBOR: EURIBOR FIX - 25/02/25
Feb-25 10:04
EURIBOR FIX - EMMI-Bloomberg
- EUR001W 2.6490 0.0190
- EUR001M 2.5650 -0.0350
- EUR003M 2.5300 0.0090
- EUR006M 2.4070 -0.0140
- EUR012M 2.4170 -0.0140
AUD: AUDSEK targets the 2024 low
Feb-25 10:02
- The Risk Off tone is keeping the lid on the AUD, although the Kiwi is still the worst performer within G10s against the Dollar.
- Nonetheless, the Aussie is seeing further selling interest and is testing broader lows, against the EUR, USD, JPY, and it is worth keeping an eye on the AUDSEK which now targets the 6.7084 level, this was the February 2024 low and also its lowest print since February 2022.
(Chart source: MNI/Bloomberg).
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