AUSSIE 10-YEAR TECHS: (M6) Bullish Theme

The NZD/USD had a range overnight of 0.5934 - 0.5958, Asia is currently trading around 0.5950. The NZD dip continues to be very shallow, this with the risks increasing of a potential resumption of hostilities in the Middle-East and higher Oil and US yields. This makes the price action stand out and begin to look quite constructive. Technically while the price holds above 0.5900 the bulls remain in control as the US Dollar struggles to benefit from an environment that should be seeing it outperform. On the day, the USD bears will be looking for this 0.5890-0.5920 area to continue to hold, looking for momentum to test above the 0.6000 area. The RBNZ economic expectations survey is published today. The key component will be the inflation expectations data. It covers forecasters, economists and industry leaders.

• Bloomberg - “Westpac Trims NZ Growth Outlook, Still Sees September Rate Hike. Westpac has lowered its forecasts for New Zealand GDP growth, saying the economy has been “knocked off course” by a surge in fuel prices and global uncertainty, according to an emailed note from chief NZ economist Kelly Eckhold.”
• “Oil rose as the Mideast standoff continued and crude shipments from Iran’s main export terminal appeared to have stopped.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes : 0.5970(NZD577m May 14), 0.6050(NZD401m May 14) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 44 Points
• Data/Event: 2Yr Inflation Expectation

Fig 1: NZD/USD Spot Daily Chart

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

The AUD/USD had a range overnight of 0.7209-0.7242, Asia is currently trading around 0.7240. The dip toward 0.7200 has proved again to be pretty well supported, this in the face of higher US yields and Oil. The market clearly prefers being short US Dollars and the AUD is a standout vehicle to express that, for the moment the USD continues to lag. Is this a signal of how weak the USD really is or does it play catch up at some point ? On the day, while this 0.7170-0.7200 area continues to provide strong support the AUD bulls will remain in control, looking for the move to build momentum. A move back below here and the AUD bulls would have their conviction challenged.

• “Budget Tight Enough to Calm RBA Nerves. Australia’s government is spending its political capital — but with discipline. Structural changes in the budget released Tuesday to property taxes and curbs on fast-growing disability outlays strengthen the country’s long-run fiscal position.” - BBG
• "IRAN WON’T JOIN NEXT US TALKS WITHOUT 5 CONDITIONS MET: FARS" - BBG. From Fars News via Telegram: An informed source emphasized that Iran's declared preconditions are the minimum confidence-building guarantees for the start of any negotiations with the United States. Iran's five preconditions for the American side include: "end of the war on all fronts, especially Lebanon", "lifting of anti-Iranian sanctions", "release of blocked Iranian funds", "compensation for war damages" and "acceptance of Iran's sovereignty over the Strait of Hormuz". 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.7100(AUD1.18b), 0.7200(AUD948m). Upcoming Close Strikes :  0.7200(AUD802m May 14), 0.7320(AUD676m May 18), 0.7350(AUD1.69b May 14) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 49 Points
• Data/Event: Wage Price Index

 Fig 1: AUD/USD spot Daily Chart

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

• RES 3: 95.900 - High Jan 8 and a key short-term resistance  
• RES 2: 95.653 - 23.6% retracement Oct - Mar Downleg (cont)
• RES 1: 95.445 - High May 06
• PRICE: 95.250 @ 16:12 BST May 11
• SUP 1: 95.195 - Low Apr 28
• SUP 2: 95.035 - Low Mar 22
• SUP 3: 94.360 - 1.0% 10-dma envelope

The break back above the 50-dma proved short-lived, with prices fading again into the Tuesday close. Any additional progress above the 50-dma opens 95.653, the 23.6% retracement for the downleg posted off the October high on the continuation contract. While the bear mode set-up in MA studies is highlighting a dominant downtrend, moves this week are highlighting the risk of a near-term correction higher. Any weakness through year-to-date lows at 95.560 would prompt further downside from here, opening vol-band support into 94.360.