GOLD: Bullion Stabilises After Middle East Truce Drives Stronger Risk Appetite
After falling 1.3% on Tuesday, gold rose to a high of $3335.24/oz today as markets stabilised following an easing in tensions in the Middle East which reduced safe-haven flows. They are now monitoring how well Israel and Iran are sticking to the ceasefire. It has been quiet on this front so far today. Bullion has come off its intraday high to be up 0.1% to $3327.2. The USD and US yields are slightly higher from early in the session.
- Gold’s bullish theme is intact and this week’s decline is seen as corrective. Moving average studies are also still in a bull mode signalling a dominant uptrend. The yellow metal will monitor US data closely for signs of negative economic impacts from import duties and any change in the Fed’s “on hold” tone. Initial resistance is at $3451.3, 16 June high, while support is at $3286.2, 50-day EMA.
- Silver has range traded reaching a high of $35.99 and then a low of $35.90. It is currently moderately higher at $35.93. Initial support is at $35.55 and resistance at $37.32. Any sell off is still seen as corrective.
- Equities are mixed with the S&P e-mini flat, Topix down 0.2% but Hang Seng up 0.8%. Oil prices are higher with WTI +1.4% to $65.28/bbl. Copper is 0.4% higher.
- Later Fed Chair Powell continues his testimonies. The Fed’s Goolsbee, ECB’s Donnery and BoE’s Lombardelli speak. US May new home sales/permits print.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
NZD: Asia Wrap - Looking To Break Higher
The NZD/USD had a range of 0.5981 - 0.6032 in the Asia-Pac session, going into the London open trading around 0.6020. The USD has opened weak again in early Monday morning trading in Asia with another leg lower.
- The RBNZ meets this week when the decision is announced on Wednesday with updated staff forecasts in the Monetary Policy Statement. It will be followed by a press conference which will be Hawkesby’s first as governor. The MPC is widely expected to cut rates 25bp to 3.25% bringing cumulative easing this cycle to 225bp. The OCR profile will be a focus as well as CPI given recent inflation developments.
- (Bloomberg) -- BNZ publishes new residential mortgage lending data for April, on its website. Lending to all borrowers NZ$7.58b, First-home buyers borrowed NZ$1.54b or 20.4% of total, Investors borrowed NZ$1.52b or 20% of total, There were 19,289 new mortgage commitments — down 12% m/m: RBNZ.
- The NZD has been bid for most of the Asian session benefitting from the broad USD sell-off and more fresh selling in USD/ASIA.
- The NZD continues to trade in a 0.5850/0.6050 range, could this latest round of USD selling provide it with 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: 0.5980(NZD513m May 26), 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 1.0819 - 1.0857, currently trading 1.0830. A sustained break above 1.0930 is needed to turn the focus higher, until then expect supply on bounces.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
CHINA: Onshore News Focuses On Appeal Of Local Bonds Over US Tsys
- China's bond market has been resilient in the face of global volatility in yields, proving that it remains a low correlation bet.
- The ongoing support of the Central Bank through the daily management of liquidity in the interbank market is a key contributor to this stability.
- A report in the China Securities Journal supports this view, describing China's monetary policy as supportive.
- China’s 10-year government bond yields have traded in a 1.68%-1.72% range over the past week, while its 30-year yields stayed at 1.86%-1.89%. The relative stable performance, which was aided by the PBOC’s strengthening of counter-cyclical adjustments, stood in contrast to recent sharp increases in the yields of US and Japanese government bonds
The report points to Moody's downgrade of the US sovereign credit rating, the cold reception of US Treasury auctions, and the market's increasing concerns about the US fiscal deficit have rapidly pushed up long-term US Treasury yields. "US Treasury bonds are facing many negative factors recently, with weak demand being the core factor, Moody's downgrade of US Treasury rating, the uncertainty of Fed policy the backdrop of rising inflation expectations, and the US Trump administration's push for a tax cut bill are risk points to investing in treasuries.
AUD: Asia Wrap - AUD Testing Back Above 0.6500
The AUD/USD has had a range of 0.6486 - 0.6537 in the Asia- Pac session, it is currently trading around 0.6520. The USD has opened weak again in early Monday morning trading in Asia with another leg lower.
- President Trump agrees to an extension to July 9 for Europe. https://x.com/TrumpDailyPosts/status/1926778871442972759
- The AUD has been bid for most of the Asian session benefitting from the broad USD sell-off and more fresh selling in USD/ASIA.
- The AUD/USD is still in a 0.6350 - 0.6550 range but looks likely to test the top end over the course of this week if not today. If you want to express a short in the AUD the crosses look a better vehicle.
- 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(AUD1.4b May 27), 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 92.42 - 93.07, it is trading currently around 92.95. Decent demand again seen towards the 92.00 area as it holds Friday night. A sustained close back below 91.50/92.00 is needed to turn the focus back towards the lows again.
Fig 1: AUD CFTC Data
Source: MNI - Market News/Bloomberg
