JGBS: BoJ SoO Showed Caution, Trade Deal In Focus, HH Spend Below Expns
Aug-08 01:27
In Tokyo morning trade, JGB futures are weaker and near session lows, -13 compared to settlement levels.
- Japan's top trade negotiator Akazawa has spoken to reporters in Washington after meeting with US Commerce Secretary Lutnick and Tsy Secretary Bessent on Thursday. Akazawa states the US will end tariff stacking and cut car tariffs at the same time. Exactly when this happens is not clear, but Akazawa stated it wasn't expected to stretch beyond 6 mths or 1 year.
- (MNI) Some Bank of Japan board members acknowledged upside risks to prices but saw no need to rush a rate hike at the July 30-31 meeting, the summary of opinions showed Friday.
- Japan's June real household spending outcome was below market expectations. In y/y terms we rose 1.3%, against a 2.7% forecast and 4.7% rise in May. In m/m terms spending was down 5.2%.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off.
- Cash JGBs are flat to 3bps cheaper across benchmarks, with the 5-year underperforming. The benchmark 10-year yield is 1.4bps higher at 1.502% versus the cycle high of 1.616%.
- Swap rates are 1-2bps higher.
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FOREX: AUD Crosses - Get A Boost From RBA, AUD/JPY Probes 96.00
Jul-09 01:24
The RBA took the market by surprise yesterday by keeping the cash rate unchanged. The market had priced a cut as 95% done, this saw the AUD bounce across the board as this cut was priced out. The standout in the crosses continues to be AUD/JPY where the market has been caught wrong footed with positioning in both legs.
- EUR/AUD - Overnight range 1.7909 - 1.7987, Asia is currently trading around 1.7960. The pair collapsed back below 1.8000 in response to the RBA before finally finding some demand back towards the 1.7900 area. Support seen towards the 1.7850/1.7800 area, a break below here would signal a deeper pullback towards 1.7600.
- GBP/AUD - Overnight range 2.0741 - 2.0875, Asia is trading around 2.0810. Decent demand was seen around the 2.0750 area overnight, the pair continues to trade sideways in the wider 2.0500 - 2.1050 range. With multi-month failures to gain upward momentum and extend above 2.1050 the probability of a pullback increases.
- AUD/JPY - Overnight range 95.46 - 95.96, Asia is trading around 95.85. The pair is attempting to break above 96.00, with the market positioned both short AUD and long JPY. A sustained break above this level could see some of these shorts pared back and provide a tailwind to probe higher.
- AUD/NZD - Overnight range 1.0856 - 1.0891, the cross is dealing in Asia around 1.0895. The cross has broken out of its recent range and focus will now turn to the more pivotal 1.0900/50 area. Can the RBNZ today give it another nudge higher ?
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
MNI: CHINA PBOC CONDUCTS CNY75.5 BLN VIA 7-DAY REVERSE REPO WEDS
Jul-09 01:22
- CHINA PBOC CONDUCTS CNY75.5 BLN VIA 7-DAY REVERSE REPO WEDS
CNH: USD/CNY Fixing Edges Up, Error Term Stays Wider
Jul-09 01:19
The USD/CNY fix printed at 7.1541, versus a Bloomberg market consensus of 7.1820.
- The fixing continues to nudge higher, but the error term is seeing great adjustments. We are now at -279pips. We were close to flat on this metric at the start of the month.
- USD/CNH is a little higher in first part of Wednesday trade, last near 7.1850, which is close to intra-session highs from Tuesday. Broader USD sentiment is a touch firmer, with yen continuing to weaken versus the USD.
