BONDS: NZGBS: Focus On The RBNZ Policy Decision

• RES 3: 96.380 - High Mar 21 2023
• RES 2: 97.190 - High May 5 2023 
• RES 1: 96.932 - 76.4% retracement of the Mar - Nov 2023 bear leg 
• PRICE: 96.470 @ 15:18 BST Sep 06
• SUP 1: 95.940 - Low Jul 25 
• SUP 2: 95.820 - Low Jun 20
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3yr futures continue to trade below its most recent trend highs. Recent weakness is considered corrective and the pullback has allowed an oversold condition to unwind. Recent strong gains reinforce a bullish condition and signal scope for an extension towards 96.932, a Fibonacci retracement point on the continuation chart. Initial firm support lies at 95.940, the Jul 25 low. 

Yen remained the clear outperformer in the G10 space post the Asia close on Friday. Yen gained a further 0.81% for the session, bringing last week's gain to 2.72%. USD/JPY saw a good degree of volatility through US trade though, with highs marked around 144.0, while on the downside we touched 141.78, just 8 pips above  key support. We track near 142.20 in early Asia Pac dealings this morning.

• Sentiment was dictated on Friday by a slightly softer-than-expected non-farm payrolls release, but some offset came from firmer average hour earnings figures. Downward revisions initially contributed to a softer greenback, however, the USD index traded in a volatile manner, gaining ground against higher beta plays (A$ off 1%).
• The softer equity backdrop (SPX down 1.73%), coupled with lower US yields, (mainly at the front end, 2yr off around 10bps to 3.64%), aided yen outperformance. AUD/JPY fell back sub 95.00, fresh lows back to early August. Despite softer front end US Tsy yields, Fed 50bps easing expectations for September were slightly pared versus pre payroll levels.
• For USD/JPY technicals, downside focus will remain on the 141.70 (Aug 5 low) level. Below this level we have, 140.82 - Low Jan 2 and 140.25 - Low Dec 28 ‘23 and a key support, levels that could come under threat this week ahead of US CPI data.
• Locally today, we have Q2 GDP revisions, which should be marginally positive given better capex trends in the quarter. July current account/trade figures are also due, along with August bank lending figures. Later on, the Eco watchers survey for August prints.
• Note the following in the option expiry space for NY cut later: Y142.00($1.1bln), Y142.50-70($3.2bln), Y143.90-00($818mln), Y145.00($1.5bln), Y146.50($2.0bln).