ASIA: Coming UP in Asia Today

The AUD/USD had a range overnight of 0.6906-0.6938, Asia is currently trading around 0.6920. The AUD bounced with risk as the market once again latched onto hope of a ceasefire, Iran rejected the deal and President Trump has doubled down on reducing Iran infrastructure to rubble. The starting positions for both sides are so far apart, with Trump even intimating the US might even charge Hormuz tolls. The market awaits to see what Trump's follow through on his threat looks like and will Iran be able to retaliate. On the day, any hint of a ceasefire would see this relief rally have another leg higher but I err on the side of more disappointment for now. The first resistance is around the overnight highs 0.6950-0.6970 and then the more important 0.7050 area. Initial support on the day is toward the 0.6850-0.6870 area. A messy market struggling for any real follow through.

• “Japan, Singapore to Ensure Australia Fuel Supply, Minister Says” -BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6800(AUD981m), 0.7000(AUD1.33b). Upcoming Close Strikes : 0.6750(AUD1.02b April 9), 0.6900(AUD1.49b April 9), 0.7050(AUD999m April 9) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 56 Points
• Data/Event: Melbourne Institute Inflation, ANZ-Indeed Job Advertisements, Household Spending 

 Fig 1: AUD/USD spot Daily Chart

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

NZGBs yields are returning from the Easter break with a firmer bias. We are +2bps, to a little higher, across the benchmarks. The 2yr is to 3.52%, the 10yr around 4.72%. NZ markets were shut last Friday and yesterday due to the Easter break. US Tsy yields were indifferent through Monday trade, as markets await Trump's Tuesday evening deadline (US Time, 8pm ET) around an Iran deal being reached, if now deal is reached, energy infrastructure will be struck. Friday saw US Tsy yields rise thanks to the NFP beat. The 10yr remains off recent highs though, ending Monday trade at 4.33%. 

• In Monday US trade, Tsys had pared early weakness - see-sawing to session highs following reports of a second chemical plant attack: “PETROCHEMICAL COMPLEX AT IRAN'S MARVDASHT ATTACKED BY US - ISRAEL, REPORTS” – Rtrs. This after the South Pars related attacks reported earlier. While "WHITE HOUSE SAYS TRUMP HASN'T SIGNED OFF ON CEASEFIRE PLAN" ... "CEASEFIRE PLAN: ONE OF MANY IDEAS" Bbg, market sentiment soured after Trump posted "IRAN MIGHT BE TAKEN OUT TOMORROW NIGHT". Oil finished the session higher, but US equities also rose.
• Broader markets sentiment is likely to remain dictated by headlines around the cease fire prospects ahead of tomorrow's deadline.
• For NZGB yields, we are within recent ranges with recent lows for the 2yr near 3.40%, while the 10yr rebound from the low 4.60% area.
• Today on the data front we have Mar ANZ commodity prices, while tomorrow the RBNZ is expected to remain on hold. With RBNZ Governor Breman’s comment late in March that the MPC isn’t in a hurry to tighten and that currently the fuel price rise is assumed to be temporary, rates are likely to remain at 2.25% for some time. Ongoing labour market softness adds to the case to keep monetary policy stimulative but the rise in ANZ business survey inflation components means that the RBNZ will remain vigilant.

Source: Bloomberg Finance L.P./MNI