AUD: AUD/USD - Consolidates Above 0.6600

The Asia-Pac USD/JPY range has been 147.42-147.82, Asia is currently trading around 147.50, -0.10%. USD/JPY is being weighed down by selling in the crosses as risk points to a potential retracement. Price continues to hold above the support area between 146.00/147.00, a sustained move below this support is needed to turn the momentum potentially lower again. While this plays out it looks to be more range trading within the wider 146.00-151.00 range. CFTC Data shows leveraged funds have bought this dip in USD/JPY betting the support remains intact. A dovish RBNZ has given NZD/JPY the nudge it needed to break below 86.50.

• Japan Export Growth Negative, Lagging Other Parts Of Asia : Japan July export and import outcomes were fairly close to market expectations, but the trade balances were slightly weaker. Exports fell -2.6%y/y (-2.1% forecast and -0.5% prior), while imports were -7.5%y/y, (-10.0% forecast and 0.3% prior). The trade deficit was -117.5bn, against a 198.5bn forecast. 
• Japan Core Machine Orders Above Forecasts, Suggesting Resilient Capex : Japan June core machine orders were better than forecast. We rose 3.0%m/m, versus -0.5% forecast and -0.6% prior. The y/y print was 7.6%, against a 4.7% forecast and 4.4% prior. Today's machine orders print continues to paint a resilient capex picture for Japan's economy.
• Options : Close significant option expiries for NY cut, based on DTCC data: 148.00($999m), 149.00($733m).Upcoming Close Strikes : 146.80($1.24b Aug 21), 147.90($1.42b Aug 22)  - BBG
• NZD/JPY - Asia-Pac range 85.87 - 87.14, Asia is currently dealing 85.90. The pair has broken through its support around 86.50 on the back of a dovish RBNZ. This a powerful move lower and if sustained should now see bounces met with supply, especially if risk continues to retrace.

Fig 1 : NZD/JPY Spot Daily Chart

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

The AUD/USD has had a range of 0.6429 - 0.6462 in the Asia- Pac session, it is currently trading around 0.6440, -0.25%. The AUD has been dragged lower by the move in the NZD and risk extending its correction lower in Asia. The AUD broke below its support just below 0.6500 overnight and looks likely to continue to trade heavy into the Jackson Hole meeting. Pivotal support is back towards 0.6300/50 which has been the bottom in its recent multi-month range of 0.6350-0.6650.

• Bloomberg - “Asian stocks fell after a selloff in big tech dragged Wall Street lower. US futures slid. Citadel Securities’ Scott Rubner said retail investors may slow their stock buying in September before resuming later this year.”
• "​​China Plans Broader Measures to Boost Housing Market​: Paper. China is expected to roll out a fresh batch of measures to stabilize the housing market, Securities Daily reports, citing industry analysts it interviewed." - BBG
• Bloomberg - “China’s commercial banks kept loan prime rates steady for a third month, as expected.”
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD410m). Upcoming Close Strikes : 0.6510(AUD520m Aug 25), 0.6600(AUD1.34b Aug 21) - BBG
• CFTC Data shows Asset managers added to their shorts -67449(Last -60729), the Leveraged community though reduced their own shorts -10121(Last -13997).
• AUD/JPY - Asia-Pac range 94.87 - 95.37, Asia is trading around 94.95. The pair broke through 95.50 overnight and has put in another lower high. Although the price is still in the 94.00-97.50 range the multiple failures towards 97.00 looks like a rounded top and with risk looking vulnerable a test of the lower end of the range looks possible. A sustained break below the 94.00/94.50 area could potentially see momentum lower pick up. Not sure we see this until Jackson Hole event risk is out the way.

Fig 1: AUD/USD spot Daily Chart

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

The TYU5 range has been 111-21 to 111-26 during the Asia-Pacific session. It last changed hands at 111-23+, down 0-01 from the previous close. 

• The US 2-year yield has edged higher trading around 3.752%, up 0.01 from its close.
• The US 10-year yield has edged higher trading around 4.308%.
• Yields are still firmly within its wider 4.10%-4.65% range. The 4.35% pivot area in 10-Year yields found solid demand overnight helped by the S&P rating, the market will now be waiting for any clues from Powell's upcoming Jackson Hole speech.
• “TRUMP: EVERY SIGN IS POINTING TO A MAJOR RATE CUT" - BBG
• "Could somebody please inform Jerome “Too Late” Powell that he is hurting the Housing Industry, very badly? People can’t get a mortgage because of him. There is no Inflation, and every sign is pointing to a major Rate Cut. “Too Late” is a disaster!" - (Trump Truth Social Post)
• (Bloomberg) - It’s not the first time that when monetary policy is tweaked in New Zealand, there’s a read across for G-10 peers, especially Treasuries. The RBNZ lowered interest rates as expected, but surprised traders by implying deeper cuts into next year. The resulting yield curve steepening is likely to be replicated by fixed income peers where central banks have an easing bias.
• Data/Events:  MBA Mortgage Applications, FOMC Meeting Minutes

Fig 1: 10-Year US Yield 2H Chart

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