JPY: Consolidates Above 153.00, Better Export Growth Doesn't Aid Yen

NZGBs closed a heavy session, 5-6bps cheaper across benchmarks. 

• (Bloomberg) “New Zealand Prime Minister Christopher Luxon is “more confident than ever” that the recovery has now arrived and says the nation can look forward to a year which is brighter than the last few.” His focus is “translating optimism evident in recent surveys into real results with more jobs, higher incomes and “the best possible shot at a better life.””
• There has been no cash US tsys trading today with the market closed for MLK Holiday.
• On a relative basis, NZGBS underperformed ACGBs, with the NZ-AU 2bps higher at -25bps.
• Swap rates closed 6-7bps higher.
• RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while October 2026 assigns XX bps.
• Tomorrow, the local calendar will see the December BNZ performance of services index. It may see an improvement following the manufacturing PMIs jump to 56.1, after being in contractionary territory since March 2024.
• Thursday sees December card transactions. They rose sharply in November due to discounting and so there could have been some payback last month. November net migration is also on Thursday.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond and NZ$225mn of the 4.50% May-35 bond.

Bloomberg Finance LP

The USD/JPY range today has been 157.43 - 157.97 in the Asia-Pac session, it is currently trading around {USDJPY Curncy}. USD/JPY tried lower in our session but found solid demand again back toward the 157.50 area. The BOJ remains in a tough spot, and their verbal push back increased dramatically last week, can they provide anything of substance at the BOJ meeting this week? A test of the BOJ/MOF resolve continues to look likely as the market moves its focus back toward the important 160.00 area, CFTC Data showed quite a large increase in Leveraged fund Yen shorts as we approach the meeting, see Graph below. In today's Asian session, first support is toward the 157.00-157.50 area as dips should continue to be supported as we approach the BOJ. Expect the jaw-boning to increase if the pair moves higher.

• "JAPAN PM TAKAICHI TO HOLD PRESS CONFERENCE AT 6PM JST: KYODO" - BBG
• MNI AU - Core Machine Orders Slump, Posing Q4 Capex Risk: Japan core machine orders fell notably more than forecast in Nov. We don't get Q4 capex spending until Mar 3, although on Feb 16, the preliminary Q4 GDP print is out, which includes business spending. The core machine orders print points to some downside risks to capex/business spending, although we are coming off a high base to start Q4. This has been a source of resilient growth for the economy and will be a watch point for the authorities/BOJ, as they have watched for signs of negative spill over from higher US tariffs to the corporate. The outlook is unlikely to change off one print though.
• CFTC Data of last week shows Asset Managers continue to pare back their JPY longs, +30177(Last +47852). The Leveraged community has aggressively increased their own shorts heading into the BOJ, -103741k(Last -68117).
• Options : Close significant option expiries for NY cut, based on DTCC data: 156.00($450m), 159.00($1.48b), 160.00($551m). Upcoming Close Strikes : 155.00($1.26b Jan 20), 156.30($1.25b Jan 22), 1598.50($1.4b Jan 21) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 81 Points

Fig 1 : JPY CFTC Data

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

The AUD/USD has had a range today of 0.6669 - 0.6695 in the Asia- Pac session, it is currently trading around {AUDUSD Curncy}. The AUD/USD is bouncing off its support toward 0.6650 again as the USD comes under pressure to start the week. The AUD price action remains constructive but its inability to gain any momentum above 0.6700 would be disconcerting for bulls. Technically while the AUD remains above 0.6600 dips should continue to find support on dips. On the day, the short-term range looks to be 0.6650-0.6730 a break either side and we could see some sort of an extension.

• MNI AU - Gauge Signals Inflation Uptrend, Q4 CPI 28 January: The Melbourne Institute inflation gauge for December picked up to 3.5% from November's 3.2% posting at 1.0% m/m increase. This was the sharpest monthly increase in two years bringing the annual rate to its highest since April 2024 but the series continues to be impacted by the timing of government electricity rebates. 
• CFTC Data last week shows Asset managers slightly increased their shorts, -33392(Last -31901). The Leveraged community has been building a decent long coming into the new year but pared this pack last week, +26697(Last +33775).
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6625(AUD833m), 0.6690(AUD693m). Upcoming Close Strikes : 0.6610(AUD773m Jan20), 0.6800(AUD860m Jan20) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 37 Points

Fig 1: AUD/USD spot Daily Chart

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