ASIA STOCKS: KOSPI + NIKKEI Lead Whilst China's Bourses Stumble into Month End

The NZD/USD had a range of 0.5786 - 0.5805 in the Asia-Pac session, going into the London open trading around 0.5795, +0.05%. The NZD broke through its pivotal 0.5800 support last week and even though it has drifted higher the last few days it has traded heavily around 0.5800 even with the USD falling. The first sell zone would be between the 0.5850/0.5900 area. 

• MNI INTERVIEW: RBNZ To Eye 2% OCR Level - Ex Assistant Gov. The Reserve Bank of New Zealand is likely to need to cut the 3% Official Cash Rate by 100 basis points over the medium term to stabilise output and inflation following weaker-than-expected Q2 GDP data, a former assistant governor told MNI.
• Bloomberg - “ The NZ government has offered to support the three power companies in which it has a majority shareholding if they need to raise capital for new electricity generation - even if it's not renewable.”
• MNI - Cotality home values for September are scheduled to be released between October 1 and 10. August was the fifth consecutive monthly decline in house prices, which may be weighing on consumer confidence.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5825(NZD360m). Upcoming Close Strikes : 0.5850(NZD310m Oct 2) - BBG
• CFTC Data of last week shows Asset Managers continuing to rebuild their short positions in the NZD, -18421(Last -11933). The Leveraged community don’t seem as convinced and reduced their own shorts, -2850(Last -5327).
• AUD/NZD range for the session has been 1.1385 - 1.1415, currently trading around 1.1385. The Cross has broken above the multiple highs around the 1.1200 area and has accelerated up towards 1.1400. I would think this 1.1400/1.1500 could initially be met with some selling and expect some work to be done up here before another extension higher.

Fig 1: NZD/USD Spot Daily Chart

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

Gold prices spiked to a new record at $3878.53/oz during Wednesday after a vote in the US senate failed to break the debt ceiling impasse. It has benefited from significant safe haven flows driven by related concerns. The government shutdown began at midnight ET but bullion remains below the earlier high up 0.1% to $3860.8 as the risk had been priced in. The US dollar index is slightly higher and yields are little changed.

• September US payrolls scheduled for Friday were widely anticipated to gauge the Fed outlook but at this stage they look they will be delayed. Fed views continue to diverge with 2026’s FOMC member Logan saying that easing should proceed cautiously.
• President Trump has said that the shutdown is likely to result in job losses.
• Silver reached a high of $47.56, breaking above initial resistance at $47.251, earlier in the APAC session but is now up 0.9% today at around $47.04. It has also benefited from US concerns but also physical tightness given its use in solar panels.
• Equities are mixed with the S&P e-mini down 0.4% and Nikkei -1.0% but KOSPI up 0.8%. Oil prices are slightly higher with WTI +0.3% to $62.57/bbl. Copper is down 0.3%.
• With the government shutdown, some US data may be delayed. September ADP employment, final September S&P Global manufacturing PMI & ISM and August construction are scheduled for Wednesday. European September manufacturing PMIs and euro area September CPI print. The Fed’s Barkin and Goolsbee and ECB’s Elderson & de Guindos speak. 

The USD/JPY range has been 147.82 - 148.23 in the Asia-Pac session, it is currently trading around 147.90, -0.02%. The pair popped back above 148.00 on the Tankan survey but failed toward 148.25 and quickly reversed all of its gains. We are once again right back in the middle of very familiar ranges. The Payrolls data this week was to be critical, so a shutdown now makes the ADP print tonight take on larger significance. First support is seen around 147.50 then back toward the bottom of the range around 146.00.

• MNI - Tankan Steady, Capex Intentions Higher: The Q3 Tankan survey printed in line with expectations and Q2 but FY25 capex intentions increased 1pp to 12.5%. Large company business conditions have been moving sideways at a solid level since the start of last year, especially for the non-manufacturing sector. Respondents see USDJPY around 145.68 in FY25.
• Bloomberg - “Markets are focused on how Japan will finance $550 billion in investment it has agreed to make in the US as part of a trade deal with President Donald Trump. The readily available resources that meet Tokyo’s funding conditions don’t look sufficient — we see a $250 billion shortfall.”
• "AKAZAWA: WANT NEXT ADMINISTRATION TO CARRY OUT $550B FUND, US NOT INTERESTED IN BREAKDOWN OF INVESTMENT, LOANS, UP TO JAPAN TO DECIDE INVESTMENT AMOUNT WITHIN $550B, ILL USE $550B FUND IN WAYS THAT WON'T IMPACT FOREX" - BBG
• "KOIZUMI LEADS JAPAN LDP RACE AMONG LAWMAKERS: ASAHI POLL" - BBG
• "JAPAN DPP LEADER TAMAKI: ETF SALES COULD FUND GOVT SPENDING,  BOJ SHOULD OFFLOAD ALL ETFS WITHIN 15 YEARS" - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 146.15($864m), 146.50($1.09b), 147.50($650m). Upcoming Close Strikes : 147.00($1.21b Oct 6), 148.00($1.15b Oct 2) - BBG.
• CFTC data shows last week asset managers increased their JPY longs slightly +79262( Last +71162), leveraged funds though again used the dip to add to their short position as the support held, -634171(Last -58811). The diverging views amongst investors continue to build. 

Fig 1 : USD/JPY Spot Daily Chart

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