GOLD: Bullion Slightly Higher, Focus Now On The Fed Outlook

The NZD/USD had a range of 0.5986 - 0.6007 in the Asia-Pac session, going into the London open trading around 0.5995. The NZD has drifted a little lower in a quiet Asian session, with US Stocks giving back their small overnight gains.

• (Bloomberg) - “Data since the April meeting have shown a softer labor market. Inflation has perked up but not enough to stop the RBNZ from proceeding with a 25-bp rate cut.”
• “There is significant downside risk to the growth outlook stemming from the global trade war. Even so, the 1Q CPI outcome is likely to see the RBNZ maintain its current OCR projections for only modest rate cuts.”
• Markets continue to price in 25bps of easing for tomorrow's meeting, with 64bps expected by November 2025.
• The NZD continues to trade in a 0.5850/0.6050 range, can it find the momentum to break this week, as the “sell America” trade gathers pace.
• The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. The first target is the highs just above 0.6000, a break here could provide the spark for the next leg higher.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes :  0.5725(NZD1.09b May 28)
• CFTC Data showed Asset managers maintaining their shorts, while the leveraged community added a decent clip back to their own short.

• AUD/NZD range for the session has been 1.0803 - 1.0824, currently trading 1.0820. A sustained break above 1.0930 is needed to turn the focus higher, until then expect supply on bounces.

  Fig 1: AUD/NZD Spot Daily Chart

  

  Source: MNI - Market News/Bloomberg

The AUD/USD has had a tight range of 0.6475 - 0.6495 in the Asia- Pac session, it is currently trading around 0.6485. A very quiet session in Asia with AUD weakness coming through in the crosses, and the USD continuing to be sold against an Asian basket.

• The AOFM sells A$400mn of the 4.25% 21 June 2034 Green Bond: Average Yield (%): 4.2162 (prev. 4.1725), Bid/Cover: 5.1625x (prev. 4.8875x).
• The AUD range has been pretty muted during the Asian session. The AUD continues to hold up pretty well against the USD so If you want to express a short it looks best to do that in the crosses for now.
• Expect buyers to continue to be around on dips while the support in the AUD holds, a close back below 0.6300/50 would start to challenge the newly formed uptrend. A break above 0.6550 and the move higher could begin to accelerate.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6510(AUD1.55b), 0.6550(AUD 610m), 0.6500(AUD 443m). Upcoming Close Strikes : none
• CFTC Data shows Asset managers have continued to add to their shorts, the Leveraged community also added to shorts though still a very small position.

• AUD/JPY - Today's range 92.14 - 92.76, it is trading currently around 92.30. The pair could not hold back above 93.00 overnight. A sustained close back below 91.50/92.00 is needed to turn the focus back towards the lows again.

  Fig 1: AUD/JPY spot Daily Chart

  

  Source: MNI - Market News/Bloomberg

USD/CNH has firmed, last near 7.1830, up a touch from end Monday levels. We are through Monday highs for the pair, although aggregate moves remain very modest at this stage (yesterday's lows were at 7.1616). Broader USD trends are mixed with higher beta FX underperforming safe havens like yen at the margins. China and Hong Kong equities are down in the first part of trade, with competition in the EV sector in focus. 

• The benchmark CSI 300 is off over 3% since early May highs. We are still well up on early April lows, but the recent weakness may be starting to trim appetite for CNH. The China to global equity ratio is still above recent lows, but has been unable to break higher.
• Earlier data showed Apr Industrial profits up 3% y/y, which is off recent highs from late 2024, but slightly above the end March pace.
• The Citi CNY economic surprise index sits just off multi year highs, which bodes well for the near term growth outlook. Official PMIs for May are due this Saturday.
• The other focus point may be on progress around US-China trade talks and the desire for the authorities not see run away CNY appreciation pressures.
• CNH/JPY has maintained its recent downtrend, last near 19.83. Lows from May 6-7 were around the 19.75 region for this pair.