AUD: AUD/USD Trades Steady Ahead Of US Payrolls Later
- The AUD/USD traded steady on Thursday and remains trading just off its weekly high of 0.6360 as risk sentiment cooled and the USD stabilized. The pair has slipped toward 0.6330, down from its earlier gains, despite robust Australian Q4 GDP data showing 0.6% quarterly growth and 1.3% yearly expansion, driven by strong public and private spending.
- Technically, the pair is holding above its 20 & 50-day EMA, with the MACD is now now neutral. The RSI, while still in positive territory at 55, flattened, signaling potential fading upside strength. Key support lies at 0.6300 (20 & 50-day EMAs), with resistance now at 0.6370 (100-Day EMA) with a break here opening a move to retest the ytd highs of 0.6400.
- The AUD was bolstered earlier in the week by solid Australian GDP figures and signs of further Chinese stimulus, supporting commodity prices like copper and iron ore. However, escalating trade tensions—particularly U.S. tariffs on Canadian, Mexican, and Chinese goods—raised fears of weakening global demand, especially from China.
- Trade jitters remain a dominant factor driving prices, with U.S. tariffs (25% on Canada/Mexico, 20% on China) threatening Australia’s export-driven economy.
- Meanwhile, commodity markets offered mixed support: copper rebounded, and iron ore advanced, though broader risk-off sentiment limited AUD upside.
- Expiries: 0.6300 (AUD2.35b), 0.6200 (AUD436.3m), 0.6255 (AUD395m). Upcoming notable strikes: 0.6385 (AUD2.47b, March 11), 0.6400 (AUD758.1m, March 10), 0.6450 (AUD607.8m, March 10).
- RBA dated-OIS prices the next 25 bps cut for July, with a 65% chance in May and another in September, reflecting cautious easing expectations amid trade and inflation uncertainties.
- The AU-US 2-year swap spread has been slowly edging higher since early feb and now trades at -18bps, up from -52bps, global yield movements in focus ahead of Tonight's U.S. Nonfarm Payrolls report.
- On the local calendar today: 11:00 AEDT - Australia to sell A$700 million 1% 2030 bonds followed by 11:30 AEDT - January Household Spending data.
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NEW ZEALAND: NZ Q4 Jobs Data Close To Expectatiosn
"*NZ 4Q JOBLESS RATE 5.1%; EST. 5.1%
*NZ 4Q EMPLOYMENT FALLS 0.1% Q/Q; EST. -0.2%
*NZ 4Q EMPLOYMENT FALLS 1.1% Y/Y; EST. -0.9%
*NZ 4Q NON-GOVT. ORDINARY TIME WAGES RISE 0.6% Q/Q
*NZ 4Q AVERAGE HOURLY EARNINGS RISE 1.3% Q/Q" - BBG
Data all quite close to expectations, slight downward revision to Q3, leaves the y/y jobs rate at -1.1%. Wages at 0.6% in line with forecasts. Average hourly earnings rose 1.3% q/q, versus 1.2% prior. More details to follow.
STIR: RBNZ Dated OIS Little Changed Ahead of the Q4 Labour Market Report
RBNZ dated OIS pricing is little changed ahead of the Q4 Labour Market Report.
- 50bps of easing is priced for February, with a cumulative 130bps by November 2025.
Figure 1: RBNZ Dated OIS Today vs. Yesterday (%)
Source: MNI – Market News / Bloomberg
JPY: Yen Lags Broader USD Weakness, Labor Earnings Toda
USD/JPY tracks near 154.30/35 in early Wednesday dealings. The yen gained around 0.30% for Tuesday's session, which trailed softer USD index moves. The DXY fell nearly 1%, the BBDXY index off 0.70%. Broader equity sentiment was mostly positive in global markets which aided risk appetite in the FX space.
- For USD/JPY technicals, we continue to remain within recent ranges. The Jan 27 low is at 153.72 as a downside watch point. On the topside, the 20-day EMA is at 155.72, while the Jan 23 high at 156.75, is likely more important topside resistance.
- USD/JPY was holding above 155.00 before the US session unfolded. Weaker US data helped pull the pair sub 154.50. We had focus on the weaker JOLTs jobs data, which comes ahead of the ADP tonight, followed by the NFP at the end of the week.
- US yields are around 3-5bps lower across the Tsy benchmarks, with US-JP yield differentials turning lower. The 10yr spread is threatening the +320bps level on the downside, levels last seen in the first half of Dec last year.
- Broader USD sentiment was weighed by optimism around surrounding trade/tariff negotiations, which boosted equities (SPX up 0.72%), supporting risk sensitive currencies in tandem.
- On the data front today we have Dec labor cash earnings data. Real earnings are forecast to stay negative, albeit just. We also get the final PMI readings for January. In the option expiry space note the following for NY cut later: Y153.15-25($2.0bln).
- Finally, BBG quote a former BoJ official stating the terminal rate for this cycle will be 1.5%, with the hike likely in July. (see this link).
