GOLD: Gold Lower, Waiting For Fed Powell’s Speech Friday

The NZD/USD had a range of 0.5956 - 0.5975 in the Asia-Pac session, going into the London open trading around 0.5965, -0.07%. The pair found decent supply overnight towards the 0.6000 area once more. The 0.5850/0.5900 area is important support if the pair is to eventually push higher, a weekly close below 0.5850 would turn the picture quite bearish. Price will need a sustained break back above the 0.6025/50 area to signal a potential base might be in place.

• NEW ZEALAND: Q2 Exports Fall As Shipments To US Normalise. NZ posted a small merchandise trade surplus in June of $42mn, the fifth consecutive positive, after a downwardly-revised $1082mn. There was a rise in the 12-month YTD deficit to $4.37bn from $3.93bn but it is too early to say the trade improvement has stalled. Annual import growth rose sharply last month and was not as weak as exports in Q2.
• Kelly Eckhold on LinkedIn: “The June Chinese trade data showed a continued acceleration of vehicle exports to New Zealand as Chinese cars/utes increasingly dominate the NZ car market. Exports to NZ are running way ahead of growth in other markets.” See Graph below.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6000(NZD300m). Upcoming Close Strikes : 0.5750(NZD348m July 23). - BBG
• CFTC Data shows Asset Managers slightly reduced their newly built longs in NZD +8192, the Leveraged community has continued to reduce their shorts last week -6744.
• AUD/NZD range for the session has been 1.0924 - 1.0944, currently trading 1.0940. The cross moved higher in response to the NZ CPI. Dips back to 1.0850/1.0900 should continue to find support as the pair tries to build momentum to move higher. 

Fig 1: Chinese Exports Of Vehicles

Source: MNI/Kelly Eckhold/Westpac

The Asia-Pac USD/JPY range has been 147.24 - 147.71, Asia is currently trading around 147.55, +0.13%. USD/JPY has tried to bounce in our session but has not managed to gain any momentum. The move lower in US yields overnight has provided further headwinds for the pair. The CFTC data showed the market is shifting its view on the JPY, with leverage funds just starting to build JPY shorts and Asset managers actively reducing their own. As a result demand could be expected on dips, first support is around 146.50/147.00 then 144.50/145.00.

• (Bloomberg) - Japan is the only major developed economy in the business of raising interest rates, and that’s more of a curse than a boon for the yen. The volatile outlook that creates for JGBs and the yen, exacerbated by President Trump’s trade war, would help explain why FX reserve managers cut their holdings of Japan’s currency by a record $68 billion in the first quarter.
• (Bloomberg) -- Overseas investors ramped up purchases of Japanese government bonds last month, pushing their quarterly acquisitions of super-long tenors to a record, according to data released by the Japan Securities Dealers Association on Tuesday.
• "JAPAN'S KATO: UPPER HOUSE ELECTION WAS TOUGH RESULT FOR LDP, WILL TAKE OUTCOME OF UPPER HOUSE ELECTION SERIOUSLY, GOVERNMENT SEES CONSUMPTION TAX CUT AS INAPPROPRIATE" - BBG
• "JAPAN TARIFF NEGOTIATOR AKAZAWA, U.S. COMMERCE SECRETARY LUTNICK MET FOR OVER 2 HOURS IN WASHINGTON ON MONDAY, JAPAN GOVT SAYS" RTRS
• Options : Close significant option expiries for NY cut, based on DTCC data: 145.40($648m), 146.75($893m), 147.00($1.64b July 22).Upcoming Close Strikes : 147.50($1.45b July 24), 147.00($916m July 24) - BBG.
• CFTC data shows Asset managers starting to reduce JPY longs more aggressively +71610, while leveraged funds have started to build into a new short JPY position -12606.

Fig 1 : USD/JPY Spot Hourly Chart

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

• The key Chinese bond futures are moving in opposite directions today, albeit modestly.  
• The 10yr future is down -0.02 at 108.71 and sits atop the 200-day EMA of 108.70 which it hasn't trade below since late May. 

• The 2-year future is up +.01 to 102.42 and remains below all major moving averages.  The nearest being the 20-day EMA of 102.44.
• The 10yr CGHB is at at 1.68% in this morning's trading.