GOLD: Gold Turns At Initial Resistance Level

As the July 9 deadline for trade talks draws near, risk appetite worsened in Asia as major bourses fell.  Trump has not helped by claiming that those BRIC countries whose policies are not aligned with the US will face an additional 10% levy, weighing heavy on Asia's currencies today.  

• China's major bourses are all down today in a weak start to the week.  The Hang Seng is down -0.45%, the CSI 300 down -0.59%, Shanghai Comp down -0.20% and the Shenzhen Comp down -0.15%.  
• In Taiwan the TAIEX fell -0.93% today.  
• The KOSPI was one of the few gainers, up +0.18% today ahead of this week's decision by the BOK.
• The FTSE Malay KLCI is down -0.83% whilst the Jakarta Composite down by just -0.05%.  
• The FTSE Straits Times in Singapore was up +0.30% whilst the PSEi in the Philippines was up +0.07%.  
• The NIFTY 50 ended Friday up +0.22% but is down in Monday morning trade by -0.11%.

ACGBs (YM +1.0 & XM +0.5) are slightly stronger ahead of tomorrow’s RBA Policy Decision.

• The RBA is widely expected to cut by 25bps. This is the sell-side consensus, albeit with a small number of economists expecting rates to be left on hold.
• May monthly CPI data should give the RBA confidence to cut. Headline inflation was close to the bottom end of the RBA's 2-3% target band, whilst the trimmed mean eased to 2.4%y/y. Services inflation is still running at a stronger pace, but we continue to move off recent highs for this sub-sector of inflation.
• RBA-dated OIS pricing is slightly softer across meetings. A 25bp rate cut this week is given a 94% probability, with a cumulative 79bps of easing priced by year-end. Notably, today's moves leave meetings pricing 15-32bps softer than levels before the May RBA Meeting.
• Cash US tsys are 1-3bps richer in today's Asia-Pac session after resuming trading following the long weekend.
• Cash ACGBs are 1bp richer with the AU-US 10-year yield differential at -15bps.
• The bills strip is little changed.
• This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$1000mn of the 2.75% 21 November 2029 bond on Friday.

The NZD/USD had a range of 0.6009 - 0.6063 in the Asia-Pac session, going into the London open trading around 0.6010, -0.83%. The pair has traded under pressure for most of our session as the deadline for tariffs approaches and the risk this presents to global growth. The NZD should find support again around the 0.6000 area as it tries to build a base from which to move higher, a sustained break below here though would risk a deeper correction back to 0.5850/0.5900.

• "RBNZ SHADOW BOARD RECOMMENDS CASH RATE IS HELD THIS WEEK: NZIER" - BBG
• (Bloomberg) - “This week’s antipodean central bank meetings could set the stage for an Australian dollar rally against the kiwi — and spark a selloff in Aussie government bonds.”
• “The Reserve Bank of Australia is widely expected to deliver a second consecutive interest-rate cut, its first back-to-back easing in six years, while the Reserve Bank of New Zealand is likely to hold firm. That policy divergence is sharpening tactical positioning in FX and rates markets.”
• US President Trump has posted via Truth Social that the US will start delivering letters outlining tariff levels to various countries starting 12pm Monday, US eastern time. Trade deals will also be announced at the same time.
• A huge bounce from sub 0.5900 and the NZD has established a foothold above 0.6000, with the USD breaking lower the NZD/USD looked to be building for a potential break higher of its own. A sustained break back below 0.6000 though could negate this and risk a deeper reversion back to the 0.5850/0.5900 area.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6075(NZD519m July 9), 0.6000(NZD407m July10).
• AUD/NZD range for the session has been 1.0811 - 1.0832, currently trading 1.0825. The cross is struggling to get any momentum for now. It looks to be in a 1.0750 - 1.0850 range for now as it awaits a catalyst to provide some clearer direction.

Fig 1: NZD/USD Spot hourly Chart

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