AUSTRALIA: Bloomberg Consensus Expects Q4 24bp Cut & 3.1% Trough

ACGBs (YM -1.0 & XM -0.5) are modestly weaker on a data-light session.

• There was no cash US tsy trading in today's Asia-Pac session, with Japan closed for a holiday.
• Cash ACGBs are 2bps cheaper.
• The bills strip is -1 to -2 across contracts.
• RBA-dated OIS pricing is giving a 25bp rate cut in September a 4% probability, with a cumulative 25bps of easing priced by year-end (based on an effective cash rate of 3.60%).
• The AOFM plans to sell A$1000mn of the 3.00%21 November 2033 bond on Wednesday and A$900mn of the 2.75% 21 November 2029 bond on Friday.
• Tomorrow, the local calendar will see August CPI data.
• (Bloomberg Economics) “Australia’s August CPI report is likely to show inflation holding firm near the top of the Reserve Bank of Australia’s 2%-3% target band. We estimate annual CPI growth stayed at 2.8%, unchanged from July. The annual electricity price increase boosted the July reading, but this will be partially unwound by the federal government’s subsidy in August.”

The BBDXY has had a range of 1195.21 - 1196.90 in the Asia-Pac session; it is currently trading around 1196, +0.05%. The USD stalled just above 1200 for the second time and drifted lower in the overnight session. Price action stood out in that we had some clearly hawkish Fed speak relative to market expectations which the USD completely ignored. Was that the extent of the bounce ? If so, it's a pretty poor effort or does the market start to eventually listen. Should the market stay below 1200 then the focus will again turn back to the pivotal support back towards the 1180 area.

• EUR/USD -  Asian range 1.1793 - 1.1820, Asia is currently trading 1.1800. The pair found some demand back towards 1.1700 and is looking to regain momentum higher. 
• GBP/USD - Asian range 1.3502 - 1.3527, Asia is currently dealing around 1.3510. The pair rejected the break higher and has moved back into the middle of its recent range. No clear direction for the moment as it consolidates around 1.3500.
• USD/CNH - Asian range 7.1131 - 7.1181, the USD/CNY fix printed 7.1057, Asia is currently dealing around 7.1160. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
• Cross asset : SPX -0.10%, Gold $3745, US 10-Year 4.147%, BBDXY 1196, Crude Oil $61.98
• Data/Events : EZ HCOB PMI’s, France HCOB PMI’s, Germany HCOB PMI’s, Spain Trade Balance

Fig 1: BBDXY Spot Daily Chart

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

NZGBs closed 1-2bps richer after a subdued data-light session. 

• There was no cash US tsy trading in today’s Asia-Pac session, with Japan closed for a holiday.
• Swap rates closed 1-2bps lower.
• Headlines have crossed from BBG that the new RBNZ Governor could be announced tomorrow. BBG note: "New Zealand is set to appoint a woman to head its central bank for the first time as it seeks to refresh an institution damaged by leadership turmoil.", while also noting the new Governor was expected to come from offshore (i.e. was not a New Zealander).
• “New Zealand is making it easier for migrant workers to come and live in the country, in its latest attempt to bolster the workforce and economy. Announcing two new residency pathways, the minister for economic growth, Nicola Willis, on Tuesday said skilled and experienced migrants could help plug gaps in the workforce.” (per Guardian)
• RBNZ dated OIS pricing closed little changed across meetings. 32bps of easing is priced for October, with a cumulative 58bps by November 2025.
• The local calendar will be empty until Friday's Consumer Confidence data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond and NZ$200mn of the 3.50% Apr-33 bond.