JAPAN DATA: Labor Earnings Below Forecast, Real Earnings -2.1%y/y

Stocks closed very poorly overnight putting risk under pressure once more into the Asian open. The break higher in USD/CNH has profound implications for the AUD and if the markets view that the PBOC is to let the CNH move higher proves to be correct, expect the AUD to come under more pressure.

• EUR/AUD - Overnight range 1.7960 - 1.8422, Asia opens with the AUD under pressure and EUR/AUD making new highs around 1.8482. This move looks set to continue.
• GBP/AUD - Overnight range 2.1009 - 2.1479, Asia continues to push this cross higher testing 2.1515 at the time writing. This move looks to be building up momentum and has potential to start accelerating, above 2.20/25 it could get messy.
• AUD/JPY - Overnight range 86.88 - 89.69, everyone's favourite way to express risk aversion in FX. The poor close therefore sees Asia continue the theme and make new lows, the first target looks to be the 78.00/80.00 area.
• AUD/NZD -  Overnight range 1.0741 - 1.0830, some consolidation in the cross as both AUD and NZD are impacted by moves in risk and the USD/CNH. Expect supply on any move back towards 1.0850/1.0900.

GBPAUD

Source: MNI - Market News/Bloomberg

In post-Tokyo trade, JGB futures closed little changed, +2 compared to settlement levels.

• Volatility remained high overnight as tariff uncertainties continued to roil the markets as the reciprocal levies went into effect at midnight.
• Trump officials confirmed 104% added tariff on China went into effect at noon, with WH press sec Leavitt adding that additional tariffs are to be collected starting today.
• Concurrently, China vowed to "fight to the end". Notably, the PBoC yesterday allowed the offshore yuan to fall to a record low, testing 7.4153 versus the dollar.
• Wall Street finished with steep losses but edged off their lows into the close.
• US tsys finished mostly weaker, with curves twisting to the steepest levels in over three years (2s10s tap 55.157 high). The US long end was hit hard with the 30-year cheapening by 15bps. The 10-year was 11bps higher at 4.29%, while the 2-year yield richened 4bps to 3.73% on haven demand and rate cut bets.
• Today, the local calendar will see Consumer Confidence and Machine Tool Orders data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.
• BoJ Governor Ueda will also give a speech at the Trust Companies Conference (15:15 JT).

TYM5 is 111-17+, +0-02+ from closing levels in today's Asia-Pac session. 

• Overnight, US tsys finished mostly weaker as tariff headlines continued to rattle markets, with curves twisting to the steepest levels in over three years (2s10s tap 55.157 high).
• The long end was hit hard with the 30-year cheapening by 15bps. The 10-year was 11bps higher at 4.29%, while the 2-year yield richened 4bps to 3.73% on haven demand and rate cut bets.
• Trump officials confirmed 104% added tariff on China went into effect at noon, with WH press sec Leavitt adding that additional tariffs are to be collected starting tomorrow.
• US stocks failed to hold onto midmorning gains (SPX e-minis slipped below 5,000 after marking a session high of 5305.25 at midmorning).
• Heavy short-end buying partially swap-tied as spreads narrowed sharply, projected rate cut pricing rebounded vs. priors - back to pricing in a full point by year-end. Current levels vs. early morning (*) as follows: May'25 at -14bp (-8.2bp), Jun'25 at -38.2bp (-28.3bp), Jul'25 at -61.6bp (-49.1bp), Sep'25 -79.3bp (-65.7bp).