AUSSIE BONDS: Futures Lower, Aided By US Moves, Job Vacancies On Tap Today

The overnight night range was 147.10-147.94, Asia is currently trading around 147.75. USD/JPY grinded higher all day yesterday paring back just over 50% of the knee-jerk lower. The demand  towards 146.00 has been pretty solid all of July and August, keeping us for the most part in a 146.00-149.00 range. CFTC data for last week shows leveraged accounts again added to JPY shorts so the initial reaction to Powell would have been unwelcome and they would be breathing a little easier today as the support continues to look solid.

• Joseph Wang on X: “Good speech by Ueda on how Japan's aging demographics are driving up wages. Increasing participation rates and retiring at a later age have reached their limits. It looks like the theory that aging demographics is inflationary will be validated. https://t.co/YyW7JcMySw”
• "Japan’s trade negotiator may visit the US this week, FNN reported. The country is also preparing a joint communique for its US investments." - BBG
• "JAPAN MULLS 5-YEAR TAX BREAK ON CAPITAL INVESTMENTS: YOMIURI" - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 148.00($992m), 146.35($716m).Upcoming Close Strikes : 148.00($893m Aug 27), 146.50($1.14b Aug 29), 145.00($1.7b Aug 29)  - BBG.
• CFTC data shows last week asset managers have begun to add to their JPY longs after a consistent period of reduction +71379( Last +60866), leveraged funds though again used the dip to add to their newly built short JPY position -50848(Last -41257).
• Data/Event : PPI

Fig 1 : USD/JPY Spot 2H Chart

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

Oil continued to rally on Monday on the back of increased Fed easing expectations following Friday’s Chair Powell comments suggesting that risks could warrant shifting policy. Crude had fallen substantially through to mid-August on excess supply concerns, which persist, but hopes of a September Fed cut have driven the start of a recovery. 

• WTI rose 1.7% to $64.74/bbl after reaching $65.10 but is still down 5.1% in August. It broke above the 50-day EMA at $63.84 opening key resistance at $69.36. It is currently around $64.74. Initial support is at $61.29.
• Brent is up 1.5% to $68.74/bbl following an intraday peak of $69.07, the highest since August 6. It is down 4.1% this month and any gains appear corrective. Initial support is at $65.01, while key resistance is $72.83.
• The breach of WTI’s 100-day MA triggered some algorithmic buying but the supply outlook is driving money managers to cut their long positions with them reaching their lowest in 17 years, according to Bloomberg.
• On the weekend, Trump again threatened Russia with “massive sanctions or massive tariffs or both” if an agreement isn’t reached in two weeks but a decision would be made then whether to take these steps or admit “it’s your fight” and do nothing.
• Punitive tariffs on consumers of Russian crude are the main market worry. India could still face an additional 25% US duty which is scheduled to be imposed on Wednesday. India has continued to buy Russian oil.

The NZD/USD had a range overnight of 0.5846 - 0.5881, Asia is trading around 0.5850. US equities and the USD retraced some of the huge Friday move as the market fully digests the full implications of what Powell said. The NZD ran into some decent selling around 0.5880 and drifted lower in the N/Y session. Sellers should be around to fade any move back towards 0.5900/0.5950 initially. US Futures have opened slightly higher this morning, E-minis +0.10%, NQU5 +0.07%. 

• (Bloomberg) - “While higher US tariffs could weigh on New Zealand’s trade flows , the impact will be hard to see in the data, with booming dairy and meat exports more than offsetting the drag, writes Bloomberg Economics’ James McIntyre. But there could still be an indirect sting in the tail for the economy: the spike in uncertainty is curbing spending and investment.”
• “New Zealand retail sales likely fell last quarter as shoppers pulled back, raising the risk of another GDP slip.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes : 0.6200(NZD355m Aug 27) - BBG
• CFTC Data of last week shows Asset Managers slightly reduced their new short position in the NZD -3198(Last -3679), the Leveraged community also reduced their own shorts slightly -4004(Last -4190).

Fig 1: NZD/USD Spot Hourly Chart

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