JGBS: Futures Closed Weaker, US Tsys Cheaper, Focus On FOMC Minutes Today

USD/CNH tracks near 7.1900 in early Monday dealings, not too far from session highs on Friday (7.1938). CNH lost 0.17% on Friday, as the USD rallied post firmer NFP/earnings data. USD/CNY spot finished up at 7.1926 (down a similar amount to CNH). The CNY CFETS basket lost further ground to 95.58, down 0.18%. This puts the index back to fresh lows since 2023. 

• For USD/CNH spot, we remain within recent ranges. The 20-day EMA resistance point is close to 7.2000, while earlier June highs were at 7.2241. Recent lows rest at 7.1645.
• Trade talks between the US and China are set to resume today in London (see this Bloomberg link). China also reportedly approved some applications for exports of rare earths to the US, it will also reportedly speed up approvals for such exports to the EU, it was announced over the weekend (Bloomberg/Reuters).
• Locally today we get May inflation figures. With CPI headline expected to remain in negative territory (-0.2%y/y is the forecast). The PPI is also projected to remain negative (-3.2%y/y). Also due is May trade figures. Exports are forecast at 6.0%y/y (from 8.1% in April). 

NZDUSD trended lower through the European session and then approached 60c following the US payroll data reaching a low of 0.6007. It finished down 0.3% to 0.6016 but has started today slightly higher at 0.6022. The US labour market held up in May in the face of elevated trade uncertainty with the unemployment rate and hours worked stable. 

• Kiwi underperformed the Aussie moderately leaving AUDNZD up 0.1% to 1.0792. It is currently lower at 1.0788 as NZGB yields are slightly higher in early trading following USTs. Australia is closed.
• RBNZ Chief Economist Conway was interviewed today on Radio NZ and said that the central bank expects core inflation to moderate towards the 2% band mid-point by end-2025 going into 2026 despite the recent pickup in headline inflation. He also expects growth to improve later in the year helped by easier monetary policy, but the “labour market is pretty flat”.
• Q1 manufacturing volumes rose a strong 2.4% q/q up from 1.2% in Q4 while sales jumped 5.1% q/q after 3.0%. Q1 GDP prints on June 19.
• Equities rallied with the S&P up 1.0% and Euro stoxx +0.4%. NZX 50 is down about 0.1% today. Oil prices rose sharply with Brent +2.0% to $66.65/bbl. Copper fell 2% and iron ore is lower at around $95/t.

Yen was an underperformer in the G10 space for Friday's session. It lost 0.90% versus the USD, with USD/JPY testing above 145.00. We track near 144.65/70 in early Monday dealings, down slightly for the session so far. 

• Outside of the NFP beat (albeit with prior downside revisions), the focus was also on better wages data. USDJPY was volatile through the NFP release, but ultimately reached 145.09, essentially matching the initial target of the 50-day exponential moving average.  
• The latest headlines/timeline on a US/China meeting likely provided an additional tailwind, feeding into the cautious optimism surrounding global trade negotiations. The SPX finished up a little over 1% on Friday.
• For USD/JPY technicals, the trend condition still remains bearish despite Friday's rebound. The 50-day EMA, near 145.20 is close by, while key resistance is seen at the May 29 high at 146.28. On the downside, attention is on the next important support at 142.12, the May 27 low. A clear break of this level would confirm a resumption of the bear leg and open 139.89, the Apr 22 low.
• Nomura stated that yen may strengthen to 136 versus the USD by end Sep. It notes: "Japanese investors pivoting out of US assets as yen yields rise — combined with implicit pressure from Washington over the exchange rate during trade talks — could push the currency about 6% higher against the dollar in the coming months" (Bloomberg).
• On the local data front today we have Q1 GDP revisions. Market forecasts are for little change (q/q growth expected at -0.2%). Also out is Apr BoP/trade balance figures and May bank lending data.
• In the option expiry space, note the following for NY cut later today: Y143.55-65($982mln), Y144.00($660mln), Y145.00($512mln).