GOLD: Gold Up as Equities Falter Friday

RBNZ dated OIS pricing is flat to 3bps softer across meetings after the release of the Q1 Employment Report.

• There were some tentative signs in the Q1 labour market data that there is some stabilisation, but at weak levels. There was a 0.1% q/q rise in employment driven by a 2.2% q/q jump in part-timers, indicating a cautionary move back into hiring.
• While the unemployment rate was stable at 5.1%, better than consensus, it appears that the rise in labour supply that was expected didn’t materialise. Thus, the data is close enough to what the RBNZ expected in February, and another 25bp rate cut on May 28 remains likely.
• 26bps of easing is priced for May, with a cumulative 77bps by November 2025.

Figure 1: RBNZ Dated OIS Latest vs. Pre-Jobs Levels (%)

Source: MNI - Market News / Bloomberg

The Asian session started off on the front foot with US stocks bouncing on news that Scott Bessent and Jamieson Greer will hold trade talks with He Lifeng in Switzerland this week. Both the AUD and NZD have both given back their early gains over the Asian session to end smalls lower on the day. MNI Economist - NZ Labour : “There were some tentative signs in the Q1 labour market data that there is some stabilisation but at weak levels.  While the unemployment rate was stable at 5.1%, better than consensus, it appears that the rise in labour supply that was expected didn’t materialise. Thus the data is close enough to what the RBNZ expected in February and another 25bp rate cut on May 28 remains likely.” 

• AUD/USD - Asian range 0.6478 - 0.6515, the AUD is currently dealing around 0.6485. Support should be seen back towards 0.6350/6400, a break below 0.6300 needed to reverse direction.
• AUD/JPY - Asian range 92.45 - 93.33, price goes into London trading around 92.80.  Price continues to stall back towards the resistance seen around 94.00. Support seen back towards the 91.50/92.00 area.
• NZDUSD - Asian range 0.5989 - 0.6023, going into London trading around 0.5995. The NZD continues to hold up well, given the NZD seems to find bids in all scenarios for risk at the moment watch for this to gain momentum.
• AUD/NZD - Asian range 1.0800 - 1.0832, the Asian session is currently trading 1.0805. Sellers have returned back towards the 1.0850 area.

Fig 1 : AUD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg

TYM5 has traded lower within a range of 111-04 to 111-11 during the Asia-Pacific session. It last changed hands at 111-10, unchanged from the previous close.

• The US 10-year yield is a little higher, dealing around 4.31%, up 0.02 from its close.
• The US 2-year yield is a little higher, dealing around 3.80%, up 0.02 from its close.
• The People's Bank of China, announced today a cut to the seven-day reverse repurchase rate to 1.4% from 1.5%. 
• The PBOC also announced a reduction in the amount banks must own in reserve (known as the RRR) by 0.5% which is expected to see CNY1tn of long term capital released into the market.
• The PBOC also announced two new funding schemes of up to CNY800bn to support the stock market. These announcements aim to stabilize markets and expected to lower borrowing costs for those looking to invest in the stock market.
• Treasuries opened lower on the news of the US-China meeting but has since clawed back those losses during the session as the market awaits the FOMC later.
• The 10-year Yield range seems to be 4.10% - 4.45%, price has moved back to the 4.30% pivot and with more supply to come this week a good chance this level holds. Focus will be on the FOMC tonight and Powell's statement.
• Data/Events :  US FOMC