AUSSIE BONDS: Futures Edged Up, Recent Ranges Hold Ahead of Christmas Break

The USD/JPY range today has been 156.33 - 156.80 in the Asia-Pac session, it is currently trading around 156.60, +0.15%. The pair has drifted sideways in a very quiet session with Japan out. The price action looks pretty clear for now though and Japanese officials would have to do something extraordinary to change the narrative. The path of least resistance is now a higher USD/JPY and I suspect any dips back toward the 154-155 area would be used as buying opportunities. I feel they will have to show some sign of fighting this toward or above 160, but given the current inputs this could potentially go a lot higher than that. It will be interesting when we get the CFTC data back as I suspect real money would only just be starting to turn back to a short Yen position.

• MNI AU - Japan More Economically Exposed To China Than Vice Versa : Japan/China tensions, over recent remarks made by Japan PM Takaichi, showed no signs of de-escalating over the weekend. Economically, Japan has more to lose relative to China, in terms of potential loss of export and tourism related flows.
• Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.07b),158.00($383m). Upcoming Close Strikes : 153.00($1.17b Nov 26), 154.00{$2.14b Nov 26), 155.00($1.86b Nov 26) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 103 Points

Fig 1 : USD/JPY Spot Daily Chart

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

NZGB yields have done very little to start the week. The 2yr was last near 2.58%, having around a 1bps range so far today, while the 10yr was at 4.15%, unchanged from end Friday levels and also with a tight range trade for Monday's session. With Japan markets out today, these has been no US Tsy trading (with US Tsy futures little changed). Focus in NZ is firmly on Wednesday's RBNZ decision. A 25bps cut is widely expected, with focus on the outlook and risks of cuts into 2026 (which can't be ruled out in our view). 

• Via BBG, the NZ Treasury noted in its fortnightly economic update: New Zealand’s economy has yet to see broad-based momentum across sectors even as economic indicators improve." 
• The NZ 2yr swap rate (NDSO2) has edged down a touch, but remains above 2.40% at this stage. The NZGB 2/10s curve is little changed at +157bps. 

• The local data calendar is quiet until Wednesday's RBNZ decision.

   

The AUD/USD has had a range today of 0.6449 - 0.6470 in the Asia- Pac session, it is currently trading around 0.6465, +0.15%. The AUD/USD has drifted a little higher in a quiet Asian session. Risk is trying to build on the bounce seen in Crypto over the weekend, I would still be wary though considering the price action we had last week. The pair had a brief look below the 0.6440-0.6460 area on Friday night but could not extend, a sustained break below here is needed to target the 0.6350 area. Given how risk is trading the AUD/USD could perhaps drift a little higher on the day, but for now I would remain skewed toward a seller on rallies, first sell zone 0.6500-0.6530. 

• MNI AU - First Print Of Complete Monthly CPI Out Wednesday: The focus this week will be on Wednesday’s new complete monthly CPI data. A partial basket has been published for a while but the focus remained on the quarterly series as they contained updates for all components. RBA Governor Bullock said that the Board will continue to concentrate on quarterly CPI for now as it assesses the trends in the new monthly CPI and allows time for seasonal factors to emerge for the trimmed mean.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD304m). Upcoming Close Strikes : 0.6450(AUD991m Nov 26), 0.6500(AUD1.07b Nov 26), 0.6535(AUD1.69b Nov 26) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 46 Points

Fig 1: AUD/USD spot Daily Chart

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