GOLD: Gold Set for Weekly Gains, Back Below Overbought on RSI

The NZD/USD had a range today of 0.5628 - 0.5662 in the Asia-Pac session, going into the London open trading around 0.5630, -0.50%. The NZD/USD has drifted lower dragging the AUD with it in our session potentially being impacted by a poor Dairy auction. The NZD is consolidating within a 0.5630-0.5700 range. The place to fade NZD again is closer toward 0.5750 and then 0.5850 should we see that area again. On the day if the support around 0.5630 gives way, then look for another test of the 0.5600 area.

• "FONTERRA CEO: STILL FEEL CONFIDENT ABOUT NZ$10/KG MILK PRICE, SEES SIGNIFICANT GROWTH IN CHINA MARKET. NZ FARMERS MAY USE CAPITAL RETURN TO REDUCE DEBT" - BBG
• "NZ Q3 PRODUCER PRICE INDEX INPUTS +0.2 PCT VS PREVIOUS QUARTER
• (prior 0.6%), NZ Q3 PRODUCER PRICE INDEX OUTPUTS +0.6 PCT VS PREVIOUS QUARTER" (prior 0.6%) - RTRS
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5480(NZD644m Nov 21), 0.5730(NZD434m Nov 19), 0.5835(NZD300m Nov19) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 41 Points

Fig 1: NZD/USD Spot Daily Chart

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

NZGBs closed showing a bull-flattener, with benchmark yields 1-5bps lower.

• ICYMI, NZ Treasury issued NZ$6bn of May 2036 nominal bond after a syndicated tap yesterday.
• Moreover, NZGBs have outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials narrower by 4-5bps.
• At -32bps, the NZ-AU 10-year yield differential is at its lowest since 2020. (see chart)
• Cash US tsys are flat to 1bp cheaper, with a steepening bias, in today's Asia-Pac session after a modest rally. Nvidia's earnings are in focus and due after the market close on Wednesday.
• NZ producer output prices rose 0.6% q/q in Q3.
• Swap rates closed 3-6bps lower, with implied swap spreads tighter.
• RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for November, with a cumulative 34bps by February 2026.
• Tomorrow, the local calendar will be empty. 

Bloomberg Finance LP

The USD/JPY range today has been 155.21 - 155.59 in the Asia-Pac session, it is currently trading around 155.35, -0.10%. The move lower in risk did not bring the usual bout of Yen buying as its safe haven status begins to be questioned. USD/JPY I suspect will remain well supported on dips as the market remains wary of the new leadership policies together with a reticence to hike rates. I will be watching again for dips on the day back toward 154.80-155.00 to be supported initially. This break should now turn the markets focus back toward 160, much to the displeasure of the MOF/BOJ. Look for any pullback towards the 152.50 area to be well supported first up if seen.

• MNI AU -  Core Machine Orders Surge, Reinforcing Positive Capex Backdrop: Japan Sep core machine orders were comfortably above market forecasts, although arguably this was a risk after the recent Q3 GDP preliminary print (which showed stronger than expected business spending in Q3). From a policy makers standpoint, it suggests resilience/strength in the business/capex sector (reinforcing what the Q3 GDP print stated). Focus will be on if these trends sustain into Q4, while the wage outlook is also a key BoJ watchpoint. Our policy team notes that key wage data will not be available until the Jan policy meeting next year. This sets up a possible Dec hold from the BoJ (although sharp yen weakness could prompt a move).
• Options : Close significant option expiries for NY cut, based on DTCC data: 153.00($1.26b). Upcoming Close Strikes : 155.00($1.49b  Nov 20), 150.00{$1.3b Nov 20) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 97 Points

Fig 1 : USD/JPY Spot Daily Chart

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