LNG: European Storage Refilling Remains A Concern

Aussie outperformed on Friday as better-than-expected US payroll data drove an improvement in risk appetite. AUDUSD trended higher through the day and then stepped up following the figures to reach a peak of 0.6470. It finished up 1.0% to 0.6445 and has continued higher today to be +0.2% to 0.6445. The USD index fell 0.4% on Friday and is currently down another 0.1%.

• AUDUSD is consolidating and now approaching the 9 December high of 0.6471, thereafter the level to watch is 0.6528, 29 November 2024. The underlying trend remains bullish. Initial support is at 0.6344, 24 April low.
• The pound was the only G10 currency to fall against the USD on Friday leaving AUDGBP up 1.1% to 0.4859, close to the intraday high, and has started today lower at 0.4857. AUDEUR rose 0.9% to 0.5704 and is currently down again though at 0.5692.
• AUDJPY was 0.7% higher at 93.44 but down 0.2% to 93.20 today. AUDNZD rose 0.3% to 1.0841 after a peak of 1.0847 and is now at 1.0830.
• Equities rallied with the S&P up 1.5% and Euro stoxx +2.4% but US equity futures have started today lower down around 0.6%. Oil prices are down sharply following OPEC’s decision to increase output with WTI -4.1% to $55.88/bbl. Copper rose 1.5% on Friday and iron ore increased to around $97/t.
• Today the April Melbourne Institute inflation gauge and ANZ job ads are released. 

ACGBs (YM -6.0 & XM -4.5) are cheaper after a heavy session for US tsys on Friday. PM Albanese's increased majority following the weekend’s national election may also be weighing on the market. 

• US tsys finished near session lows on Friday after higher-than-expected nonfarm payrolls at 177k (sa, cons 138k), of which private contributed 167k (sa, cons 125k), triggered the early reversal. However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs. -48k two-month revision).
• S&P Global PMIs for April have printed: The Composite Index fell to 51 from 51.6 in March, and the Services Index fell to 51 from 51.6 in March.
• Cash ACGBs are 5-6bps cheaper with the AU-US 10-year yield differential at -4bps.
• Swap rates have risen by a similar amount.
• The bills strip has bear-steepened, with pricing -2 to -6.
• RBA-dated OIS pricing is flat to 7bps firmer across meetings today. A 50bp rate cut in May is given a 2% probability, with a cumulative 104bps of easing priced by year-end.
• Today, the local calendar will also see MI Inflation and ANZ-Indeed Job Advertisements.

The overnight range was 143.73 - 145.30, Asia is currently trading around 144.75. USD/ASIA had some significant moves lower in Asia on Friday as trades that were seen as the cleanest expression of tariffs have begun to be unwound. The market will again be focused on this today during our session.

• Kyodo News via BBG - “Finance Minister Katsunobu Kato said at a press conference in Milan, Italy on the 4th, "We are not considering using the sale of U.S. Treasury bonds as a means" in Japan-U.S. negotiations over the Trump administration's tariff policy. He had previously indicated that U.S. Treasury bonds held by Japan could be used as a bargaining chip, but this appears to have been a correction.”
• Yomiuri via BBG - “Japan proposed increasing imports of corn and soybeans in tariff talks with the US.”
• USD/JPY the 145.50/1.4700 area proved to be tough to get through initially. The JPY has benefited from the capitulation in a host of USD/Asia trades, led by USD/TWD.
• Look for some support initially back towards 143.00, but we would probably need another catalyst to test below that again. Which probably leaves a range of 143-147 for the week likely.
• CFTC data shows Asset managers continuing to add to already significant JPY longs, leveraged funds seems to have pared their shorts back a little.
• Data : US ISM Services

Fig 1 : CFTC data

Source: MNI - Market News/Bloomberg