ASIA FX: KRW & TWD Rally, But Recent Ranges Holding, CNH Steady

The AUD and NZD have both traded bid once more making new highs in Asia. In its minutes The Reserve Bank of Australia expressed caution over future interest-rate cuts, saying May would be an "opportune time" to revisit policy settings. The board will have additional data on the labor market, inflation, household spending, and global trade policies by the May 19-20 meeting, which would have a considerable bearing on the decision.

• AUD/USD - Asian range 0.6316 - 0.6355, AUD has traded quietly bid for most of the Asian session, breaking the overnight highs and going into the London open at the top of its range. Shorts will be hoping for sellers to return but will be watching the 0.6400 area this week for signs of the next leg of position squaring.
• AUD/JPY - Asian range 90.38 - 91.01, AUD/JPY was bid from the open and has drifted higher for the majority of the Asian session. Price goes into the London open around 91.00 pressing its highs. AUD/JPY is trying to build a base as risk stabilises, but it remains to be seen if it can this last. Expect supply once more back towards the pivotal 94.00 area.
• NZDUSD - Asian range 0.5861 - 0.5915, NZD has traded bid the whole session and there is still very little pullback. NZD printing around 0.591/5/20 going into London, having made new highs in the session.
• AUD/NZD - Asian range 1.0734 - 1.0779, the cross drifted lower in the Asian session before finding some buyers towards the 1.0740 area. The cross is going into London pretty directionless but the bias appears to remain for the upside to be capped, as liquidity in the NZD dries up quicker than for the AUD on any move higher.

Fig 1: AUD/USD Daily Chart

Source: MNI - Market News/BBG

• Having hit new highs, yesterday saw gold slip lower into the close as profit taking on strong gains was evident yet in the Asian trading day, the rally continued.
• Gold opened at $3,210.93 and had a slow start to the trading day before jumping to $3,228.33, a gain of +0.54%
• South African miner Gold Fields Ltd has been ordered to stop mining its lease and leave one of its mines in Ghana after the rejection of a lease extension.
• West Australian miner Bellevue Gold is the target of several takeovers as the soaring cost of gold eats into its cashflow due to soaring hedge costs.
• The PBOC is offering increased quotas to banks for gold imports to meet the domestic demand from institutional and retail investors.
• Gold remains steadfast above all major moving averages with the nearest, the 20-day EMA, at $3,091.86

TYM5 has traded in a tight 110-19/110-27+ range so far in today's Asia-Pac session. Going into the London open, it is dealing near its highs around 110-26,+0.02 from its close.

• The US 10-year yield has continued to drift lower in a tight range of 4.3408 - 4.3856 in Asia. Going into the London open dealing around 4.3485%.
• The market is starting to realise the FED will not be stepping in to rescue it by cutting rates, as long as it expects inflation to track higher on the back of Trump’s policies.
• The Fed’s Waller said yesterday the impacts of the tariffs on inflation would be temporary. He also described the new policy as “ one of the biggest shocks” on the US economy in decades, the effects of which are highly uncertain.
• Bostic spoke after the US market close: ”Right now range of possible outcomes has multiplied. Inflation still much higher than target. Not in position to boldly move in any direction, need more clarity.”
• Bessent says the Treasury has a big toolkit if needed for Bonds.
• Dips in the 10-year yield back towards 4.25/30% should now find supply, any move back to 5% and above would become problematic for equities.
• Upcoming Data/Events: Retail Sales and Fedspeak from Powell on Wednesday.