IRON ORE: Downtrend Persists, April Lows Within Reach

RBA-dated OIS pricing is flat to 2bps firmer across meetings today, with late 2025 / early 2026 leading, ahead of tomorrow’s RBA Policy Decision. 

• A 25bp rate cut in May is given a 95% probability, with a cumulative 75bps of easing priced by year-end.
• Notably, today’s moves leave meetings pricing 4-44bps firmer than levels before the release of Q1 CPI data on April 30.

Figure 1: RBA-Dated OIS – Current Vs. Pre-Q1 CPI

Source: MNI - Market News / Bloomberg

The NZD/USD had a range of 0.5875 - 0.5899 in the Asia-Pac session, going into the London open around 0.5890.

• MNI - China Data : “The April activity outcomes were mixed, with retail weaker than forecast, while IP posted a modest upside surprise. Both measures slowed versus March outcomes. Headwinds still persist in the property sector, while house price growth slipped further into negative territory.”
• The NZD/USD has held up pretty well considering the knee-jerk reaction lower in stocks to the downgrade news.
• The NZD now seems to be comfortable in a 0.5800/0.6050 range and awaits a catalyst to provide the impetus to break-out.
• 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 above here is needed to regain momentum.
• CFTC Data showed Asset managers continuing to build back their shorts, while the leveraged community continued to reduce their own short.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5915(NZD1.06Bln)

• AUD/NZD range for the session has been 1.0872 - 1.0899, currently trading 1.0885. The Cross has found some supply just above 1.0900, support is seen back towards 1.0800. A sustained break above 1.0920 would turn the focus higher.

  Fig 1: NZD/USD Spot Daily Chart

  

• Source: MNI - Market News/Bloomberg

The AUD/USD had a range of 0.6400 - 0.6422 in the Asia- Pac session, it is trading around 0.6410. AUD/USD continues to find demand sub 0.6400, while underperforming in the crosses.

• “Australia is “up for a deal” with the EU but not at any price, PM Anthony Albanese said, offering cautious optimism after years of talks.”(BBG)
• MNI - The RBA decision is announced tomorrow and is widely expected to cut rates 25bp to 3.85% after Q1 trimmed mean CPI fell within the 2-3% target band. After stronger-than-expected Q1 wages and April employment data, it is likely to retain its cautious tone regarding future easing and reiterate that uncertainty is currently very high. Updated staff forecasts will be published with the meeting statement.
• Bloomberg - “The Australian dollar is positioned for upside should the RBA deliver a hawkish cut. The trimmed mean CPI remains substantially above the middle of the 2 to 3% target range, while labor market data is holding firm and fiscal spending is strong. The central bank is overwhelmingly expected to ease policy, but those factors argue for policymakers to express caution about further reductions if they do so. Investors are betting the RBA will lower rates twice in the second half of the year, so those positions look vulnerable to a rapid unwind.”
• (Bloomberg) -- “A few larger exporters were seen buying the Australian dollar in the Tokyo morning session to hedge out their US dollar receipts, according to Asia-based FX traders.”
• The AUD/USD has found demand around again 0.6400 today, expect buyers 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.
• MNI FX OPTIONS: Expiries for May19NY cut 1000ET (Source DTCC) : AUD/USD: $0.6525(AUD393.9m), Upcoming Strikes : 0.6350(AUD367m May 20)

• AUD/JPY - Today's range 92.88 - 93.23, it is trading currently around 93.10. Support is again being challenged back towards the 93.00 area. There should be some demand around 92.00/93.00 first up but a sustained close back below 91.50/92.00 would turn the focus back towards the lows again.

  Fig 1: AUD/USD spot Daily Chart

  

  Source: MNI - Market News/Bloomberg