US TSYS: Marginally Richer
Cash Tsys have opened flat to 1bp richer across the major benchmarks.
- Asia-Pac participants have marginally faded yesterday's cheapening as they digest yesterday's ISM Manufacturing Survey and Fedspeak, as well as the the latest round of firmer than expected inflation data out of Europe and relatively dovish rhetoric from BoE Governor Bailey.
- TYM3 deals at 111-01+, +0-01+, with a narrow 0-01+ range observed thus far.
- A thin data calendar in Asia leaves participants on headline watch.
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AUD: CBA: Some Convergence In Spot & Fair Value, See Further Upside
CBA note that “AUD/USD has risen by almost $0.09 since its most recent low in mid‑October 2022. The lift in the AUD/USD has been driven by the reopening of the Chinese economy and a more optimistic view of the global economy.”
- “Despite the large rise in recent months AUD/USD is still trading below our estimate of fair value, which currently centres on $0.79 with a range of $0.74‑0.85.”
- “However there has been some convergence between AUD/USD and our fair value estimate. Our equation shows that fair value for the AUD/USD eased over H222, with falling commodity prices and a negative interest rates differential between Australia and the U.S. reducing fair value. Working the other way, a lift in global risk appetite (as measured by a lower VIX index) has supported fair value for AUD/USD.”
- “We expect that the AUD/USD can trend higher over the coming weeks as the Chinese economy continues its recovery.”
JGB TECHS: (H3) Fades Into Friday Close
- RES 3: 151.13 - High Mar 3
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5
- RES 1: 147.74/148.79 Low Jan 23 / High Nov 16
- PRICE: 146.79 @ 16:08 GMT Jan 30
- SUP 1: 145.13 - 1.0% 10-dma envelope
- SUP 2: 144.15 - Low Jan 13
- SUP 3: 144.10 - 2.0% Lower Bollinger Band
The January rally in JGBs continues to fade, although prices still hold the bulk of the post-BoJ bounce. The rally puts prices well above recent lows, although the overarching downtrend remains intact for now. First resistance sits at 148.79, the Nov 16 high. Vol band support remains below at 144.02 and 143.88 below.
JGBS: Futures A Touch Cheaper On Global Impulse, No Tweaks To BoJ Rinban Plan
JGB futures cheapened at the margin overnight, ultimately shedding 9 ticks, with the impulse from firmer-than-expected Spanish CPI data (which was slightly muddied by methodology tweaks) leaking through into the contract.
- There hasn’t been much in the way of meaningful domestic news flow observed since the Tokyo close, with no movement in the BoJ’s February Rinban plan (when it comes to frequency and outlined ranges of purchases) leaving continued BoJ speculation (in lieu of potential Deputy Governor-in-waiting Okina’s comments, made late Monday) at the fore.
- Labour market data got the usual month-end domestic data deluge underway, with nothing in the way of movement in the headline metrics. Retail sales and flash industrial production will cross shortly, with consumer confidence data slated for later in the session. 2-Year JGB supply rounds off the domestic docket.
