BUND TECHS: (M5) Resistance Remains Exposed

** correction to headline from earlier bullet, NZD/JPY was testing through the 50-day EMA, not the 100-day 

NZD/USD is outperforming in the G10 space, up around 0.25% in latest dealings. We track close to 0.5745/50, which is just under intra-session highs from Tuesday. The 100-day EMA is above 0.5760, a potential upside resistance watch point. 

• The A$ is the next best performer, but up a more modest 0.10%. Yen is underperforming, down around to 0.30%, with USD/JPY last near 150.35/40.
• NZD/JPY is near 86.40, which puts it above the 50-day EMA, albeit just. The 100-day EMA is around 87.40, which wasn't breached in the earlier March risk on period.
• The fact yen is underperforming points to this being a risk on move, although US equity futures sit close to flat. Concerns around China Nvidia demand in light on new energy regulations (per the FT) has weighed on Nasdaq futures.
• BoJ Governor Ueda comments are also in focus. He is before the parliament today and largely has reiterated recent BoJ rhetoric, with high uncertainty remaining around the economic outlook. 

• Regional equities are higher, but gains are mostly less than 1% at this stage (ex Indonesia). 

   

The USD BBDXY index sits higher, last around 1271.5, up +0.10%. This is mostly reflective of a weaker yen backdrop, which has unwound some of Tuesday's outperformance. 

• USD/JPY was last near 150.45/50, off around 0.40% in yen terms. Tuesday highs at 150.94 remain intact, while the 50-day EMA is nearby to this high as well. Earlier we had the PPI services for Feb, which were slightly below market estimates, but still suggest an elevated inflation backdrop.
• BoJ Governor Ueda has also been before parliament today, giving wide ranging remarks. On policy, with real rates still negative there is more room for the BOJ to adjust policy, if the economic evolves as expected. Still uncertainty is more elevated compared to when the central bank tightened in Jan, Ueda noted.
• Market pricing for the next BoJ hike is around 25bps by the Sep policy meeting.
• In the cross asset space, US yields are up around 2bps across the Tsy benchmarks, which has likely aided USD sentiment, particularly against the yen.
• AUD/USD dipped under 0.6300 but was supported, last near 0.6305/10, up slightly for the session. The Feb monthly CPI was just under market estimates, but didn't shift sentiment much in the FX space.
• Regional equities are mostly higher, albeit with Indonesia the standout. This has added a risk on feel to markets, but US futures are close to flat.   
• NZD/USD has risen back towards 0.5750, outperforming the AUD at the margins. AUD/NZD hasn't been able to sustain +1.1000 levels and is now back at 1.0980 (the weaker Feb CPI a likely factor). NZD/JPY is back above its 50-day EMA, last close to 86.50.
• Later the Fed’s Kashkari and Musalem appear and preliminary US February durable goods data print. The ECB’s Cipollone participates in a panel and UK February CPI and the government spring budget statement are released.

ACGBs (YM -4.0 & XM -4.0) are weaker and sit in the middle of today’s of today’s ranges. 

• February headline CPI rose 0.1% m/m to be up 2.4% y/y down from January’s 2.5%.
• Given it continues to be impacted by various state and federal electricity rebates, the focus is on the underlying trimmed mean which moderated 0.1pp to 2.7% y/y and has been under 3% now for three straight months.
• Q1 data is released on April 30 and the RBA is forecasting core at 2.7%, in line with the monthly data and below the target band’s ceiling, which will be the first time since Q4 2021. The outcome will be a key input into the May 20 RBA decision.
• Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains
• Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +13bps.
• Swap rates are 3bps higher.
• The bills strip contracts are -2 to -5, with a steepening bias.
• RBA-dated OIS pricing is flat to 5bps firmer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 64bps of easing priced by year-end.
• The local calendar will be empty for the remainder of the week.