ASIA STOCKS: KOSPI Up on Government Comments; Shenzhen Through Key Tech Level

Gold fell early in the APAC session to $4006.48/oz on comments from US President Trump suggesting that the US-China trade situation may not be as severe as implied on Friday. However, it didn’t last and concerns that the trade war could be reignited as well as a lower US dollar drove gold just above last Wednesday’s record to $4060.01, opening resistance at $4074.5, a Fibonacci projection. It is currently 1.0% higher at $4057.4.

• Silver has rallied strongly with prices up 2.3% to $51.47, close to the intraday high and above resistance and all-time high at $51.235. It is also above a Fibonacci projection at $51.405 opening round number resistance at $52.00. It has been boosted not just by trade-related safe-haven flows but also by constrained liquidity in London. In addition, it remains unclear if it will be excluded from US import duties.
• Regional equities have sold off with the Hang Seng down 3.5% and ASX -1.0% but S&P e-mini up 1.2%. Oil prices are higher with WTI +1.4% to $59.73/bbl. Copper is up 2.0%.
• Later the Fed’s Paulson speaks. The US bond market is shut but equities are open. IMF/World Bank meetings are taking place. The ECB’s Buch and BoE’s Mann and Greene speak. Germany’s September WPI prints.

The NZD/USD had a range of 0.5722 - 0.5745 in the Asia-Pac session, going into the London open trading around 0.5740, +0.30%. Some clarification from China over the weekend on their new rare earth export controls has seen the US walk back its aggressive stance and a more conciliatory tone is being set. I suspect a lot of Friday's moves will see some decent pullbacks on this, but how long it lasts is anybody's guess. The NZD has drifted higher from the open in sympathy to moves elsewhere and another very low CNY fix from the PBOC which has underpinned the move for now. The NZD had a poor weekly close though and technically remains a sell on rallies now for those looking for a currency to be short of in their basket. The sell zone remains back toward the 0.5800 area with the market looking for a potential move back towards the 0.5500/0.5600 area.

• MNI - Services & Manufacturing Indices Signal Ongoing Weak Q3 Activity. The BNZ services and manufacturing PMIs for September were consistent with the RBNZ’s assessment in its October statement that “economic activity recovered modestly in the September quarter”. Continued weak activity, including employment, at the end of the quarter is consistent with further RBNZ easing with policy likely to become stimulatory.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5850(NZD300m Oct 14), 0.5950(NZD312m Oct 16) - BBG
• AUD/NZD range for the session has been 1.1321 - 1.1373, currently trading around 1.1365. The Cross failed again above the 1.1400 area where I suspect initial paring back of longs. A clear sustained break above 1.15/1.16 resistance and the market will begin to think about levels back towards 1.2000 and above. Dips back toward 1.1200 should be a good place to start buying again if seen.

Fig 1: AUD/NZD Spot Weekly Chart

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

The USD/JPY range has been 151.74 - 152.28 in the Asia-Pac session, it is currently trading around 151.90, +0.45%. The pair collapsed with risk and US yields, and I am a little surprised the bounce this morning has not been bigger on the more conciliatory tone now being used. The Crypto market has led the retracement in risk higher over the weekend as the temperature was lowered, but the huge deleveraging of positions and the first crack in the markets conviction will be hard to just shake off. The JPY crosses in particular took the brunt of it on Friday and the rejections some pairs had look ugly.  It will be interesting to see how the week starts and how much faith the markets have in those in charge to sort this mess out amicably. Technically dips back toward the 150/151 area should now find support first up.

• The FT is reporting the Dutch Government is taking control of the Chinese-owned chipmaker Nexperia, which could further inflame the situation. Arnaud Bertrand wrote a thread on X: “It invites retaliation from China, which is almost systematic. I wouldn't want to be a Dutch company with Chinese operations right now.”
• "KOMEITO DOESN'T RULE OUT OPPOSITION PARTY COOPERATION: KYODO" - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 150.00($340m), 151.00($856m). Upcoming Close Strikes : 150.00($986m Oct 15) - BBG.

Fig 1 : USD/JPY Spot Daily Chart

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