NZD: Hits Fresh Multi Month Highs, Uptrend Still Intact
NZD/USD tracks near 0.6035 in early Friday trade, after managing a modest gain in aggregate for Thursday's session. Intra-session highs were at 0.6080, levels last seen in Oct last year. Broader USD trends were mixed with yen underperforming, amid higher front end US Tsy yields, while US equities were volatile, finished lower (amid as escalating Trump/Musk spat). Earlier risk appetite had been supported on headlines around a Trump/Xi call aimed at getting trade talks back on track.
- Broader uptrend pressures in NZD/USD still appear to be intact. All key EMAs are trending higher (the nearest is the 20-day, which is close to 0.5970), while a break above 0.6080 could see the 0.6145/50 region targeted (last seen in Oct 8-9th last year).
- NZD/USD sits too elevated relative to NZ-US 2yr swap trends, but remains supported on broader USD softness, with USD indices still close to key levels (1208.25 last for BBDXY).
- The AUD/NZD cross has consolidated somewhat, tracking near 1.0780 in latest dealings. Recent lows rest at 1.0727. The 20-day EMA is close to 1.0805, the 50-day at 1.0840.
- The local data calendar is empty until the start of next week when Q1 manufacturing activity is due.
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OIL: Large US Stock Drawdown Reported
Bloomberg reported that US crude inventories fell 4.49mn barrels last week, according to people familiar with the API data. There was an 854k drop at Cushing. In terms of products, distillate stocks rose 2.24mn but gasoline declined 1.97mn. The official EIA data is out later on Wednesday.
AUSSIE 3-YEAR TECHS: (M5) Within Range of Highs
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.610 @ 16:23 BST May 6
- SUP 1: 95.900 - Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures continue to circle just below recent contract highs, having cleared resistance on the continuation contract. The rally has taken out resistance at 96.730, the Sep 17 ‘24 high. On the downside, any reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.
NEW ZEALAND: Whole Milk Auction Price Rises To Fresh Highs Since 2022
Overnight the average whole milk auction price rose to $4374, from $4171 at the previous auction (held mid April) (per the GDT website, see this link). This is fresh highs for this auction result going back to early 2022. The rise was close to 4.9% compared to the previous auction.
- All else equal this supports NZ's terms of trade backdrop. The orange line on the chart below is the NZD Citi terms of trade proxy, with the white line the average whole milk auction price.
Fig 1: Whole Milk Auction Price
Source: Citi/GDT/MNI - Market News/Bloomberg
