JGB TECHS: (M5) Rallies off Lows

The NZD had a range overnight of 0.5944 - 0.6013, Asia is pressing the lows as the consensus lower USD trade takes a breather.

• US Treasury Secretary Bessent stated that there is no unilateral offer from Trump to cut China tariffs, and that a full China trade deal could take two-to-three years. 
• “If these reports of de-escalation intensify, then we could see this US dollar rebound extend further,” Derek Halpenny, head of global markets research at MUFG Bank. “Still, investors are likely to remain cautious and in many ways, damage is already done. That likely means any US dollar recovery will be brief and relatively modest”(per BBG)
• The NZD could once more not hold onto to its gains above 0.6000 and opens in Asia around 0.5950, the longer this move stalls the potential for a corrective dip increases.
• The price action continues to suggest though that dips will probably find demand, first support on the day is 0.5900 then 0.5800/50.
• CFTC data show Asset managers have been aggressively paring back their shorts last week, Leveraged funds not so much. 
• Data : ANZ consumer confidence Index came in higher than the prior outcome this morning at 98.3, +5.5% MoM.

Fig 1: NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg

US President Trump has delivered wide ranging comments in the oval office as he signed education related bills. Trade/tariffs and monetary policy were among the focus points. 

• On a deal with China, Trump stated that it would depend on China. He stated the tariff level on China would likely be decided in the next 2-3 weeks. If a deal with China couldn't be reached then the US would set the tariff rate.
• Earlier, the FT reported (link) the Trump administration is set to soften tariffs due to be paid by US automakers on key imported components. The report centers on a "destacking" of some previously-announced tariffs, including the fentanyl duties on Chinese imports and duties on steel and aluminum. From the FT article, citing "two people with knowledge of the matter".
• Trump, via Commerce Secretary Lutnick, stated that 90 countries have contacted the US in relation to trade.  
• On monetary policy, Trump stated that he believes Powell is making a mistake by not lowering interest rates, given the weaker food and energy price backdrop since he took office. When asked if had spoken to Powell, Trump stated no he hasn't, but that he may call him.
• Trump was also asked about the recent decline in tourism arrivals into the US. He stated nationalism factors could be at play, but he also spoke about the value of the dollar being high. He added that countries like Japan and China wanted to keep their FX rates cheaper versus the USD. He added he had discussed this with the leader of Japan in the past.
• Trump reiterated that the US doesn't need anything from Canada (cars, energy or lumber), but that the country is working on a trade deal with Canada. 

Aussie outperformed in the stronger equity environment as the US dollar strengthened (BBDXY +0.6%). AUDUSD fell 0.1% to 0.6359 off the intraday high of 0.6435. It trended lower following the better-than-expected US S&P Global manufacturing PMI, even though services disappointed. AUDUSD has started today higher and is currently around 0.6367.

• The bullish theme in AUDUSD remains intact with Wednesday’s high above key resistance at 0.6409, signalling scope for a continuation higher, and approaching 0.6439. Initial support is at 0.6349.
• The yen underperformed leaving AUDJPY 1.2% higher at 91.19 but is currently down 0.2% to 91.03. AUDEUR rose 0.8% to 0.561 but has started today down 0.1% to 0.5612. AUDGBP was up 0.5% to 0.4797.
• Aussie strengthened against kiwi rising 0.2% to 1.0696 after a high of 1.0726. Moves above 1.07 have been difficult to sustain and the pair oscillated around this level for most of yesterday.
• Equities rallied with the S&P up 1.7% and Euro stoxx +2.8% while the S&P e-mini is currently down 0.2%. Oil sold off with WTI -2.2% to $62.29/bbl. Copper fell 0.9% and iron ore is around $100/t.
• There are no data or events in Australia today.