EM CEEMEA CREDIT: First Abu Dhabi Bank: New USD deal

Aussie government bond yields sit a touch off earlier highs post the RBA minutes, but we remain within recent ranges. The 3yr bond yield was last around 3.38%, down a touch post the RBA minute headlines. Session highs rest above 3.40%. There is less change towards the back end of the curve, with the 10yr continuing to hold close to 4.29%. 

• The RBA minutes noted further easing is likely over the coming year, which is expected to be at a gradual or slightly faster pace. The board judged it is too soon to know which scenario is likely to unfold and would be guided by incoming data. 
• RBA dated OIS for the Dec meeting is down a touch, last around 3.22%, while session highs rest at 3.24%.
• In the futures space, we are holding modestly softer for the 3yr and 10yr futures, 10yr (XM) last close to 95.68.
• US Tsy moves may also be spilling over, with weakness in front end yields after Trump stated earlier he was removing Fed Governor Cook from her position. 

This morning's news that Trump has removed Fed Governor Cook will just add fuel to the rate cut fire, with Trump now in a position to appoint another uber dovish Governor to do his bidding. Will this eventually break the world's trust in US institutions though? This morning US futures have turned lower on this news, ESU5 -0.15%, NQU5 -0.30%. The JPY crosses continued to trade sideways for the most part with their upward momentum looking to have stalled for now.

• EUR/JPY - Overnight range 171.58 - 172.66, Asia is trading around 171.50. This pair’s move higher looks to be stalling for the moment. A sustained break above 173.00 is needed to see momentum pick up and the uptrend regain the upper hand. The price action suggests risk is we drift back to 170.00.
• GBP/JPY - Overnight 198.70 - 199.29, Asia trades around 198.50. This pair topped out around 199.50 overnight. A sustained break above 200.00 is needed to see momentum higher restored. Like EUR/JPY momentum higher seems to be stalling, a move back below 197.50 could signal a deeper pullback.
• NZD/JPY - Overnight range 86.32 - 86.65, Asia is currently dealing 86.10. The pair found decent selling around 86.50 the last couple of days. Is that the end of the pullback, I would have preferred something back towards 87.00/50 to fade.
• CNH/JPY - Overnight range 20.5641 - 20.6616, Asia is currently trading around 20.5800. This pair has again bounced off its pivotal 20.30/20.40 support. A sustained break back below 2.3000 is needed to turn momentum lower again, until then it looks comfortable in a 20.4000-20.9000 range.

Fig 1 : NZD/JPY Hourly Chart

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

The BBDXY range overnight was 1201.02 - 1207.89, Asia is currently trading around 1205, -0.20%. The USD bounced after finding good demand back towards 1200 again overnight. This morning's news that Trump has removed Fed Governor Cook will just add fuel to the rate cut fire, with Trump now in a position to appoint another uber dovish Governor to do his bidding. This has seen the USD fall quickly and could further erode confidence in US institutions which would provide further headwinds for the USD. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows. 

• ISABELNET on X: “Dollar - Powell's speech has put the US dollar gauge under pressure, confirming a test of technical support is underway amid growing market bets on imminent Fed rate cuts to address softer employment data and economic risks.”
• Robin Brooks on X: “The Dollar is on a rising trend since July 2. Periodic setbacks like payrolls revisions on Aug 1, CPI on Aug 12 and Powell's Jackson Hole speech on Aug 22 hit USD, but after each of these it starts rising again. This is important. Markets aren't negative on the Dollar anymore...”
• Bloomberg - “The greenback’s three-month basis against five peers is on track to turn negative for the first time since August 2020 — a sign of fading foreign appetite for Treasuries. Factors possibly narrowing premiums include relative liquidity and prospects for Fed rate cuts, Mizuho said.”
• Data/Events :  Philadelphia Fed Non-Man Activity, Durable Goods Orders, FHFA House Price Index, Richmond Fed Man Index/Bus Conditions, Conf. Board Consumer Confidence, Dallas Fed Services Activity

Fig 1: BBDXY 2H Chart

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