STIR: Mis-Pricing? Front End RBNZ Vs RBA

The EUR/USD range overnight  was 1.1458-1.1563, Asia is currently trading around 1.1565, +0.10%. The pair once again found solid demand on a 1.14 handle and when reports of a potential early off-ramp circulated the EUR broke back above 1.1500 and extended straight toward its next level of resistance. The pair continues to hold above its pivotal support in the 1.14-1.15 area for now and the price action is perhaps telling us the market has become too bearish too quickly. I remain highly skeptical of this off-ramp the market is buying risk on but you can’t argue with the price action. I still prefer to fade rallies as a result, until the global flow of oil, fertilizer and helium is restored I will err on the side of caution. On the day, first resistance is toward 1.1600-1.1650 and then the pivotal 1.1750-1.1800 area.

• “Christine Lagarde challenged Scott Bessent’s optimism that the war’s economic fallout will be short-lived, people familiar said.” - BBG
• The Long View on X: “The United Arab Emirates plans to join U.S. military efforts to forcibly reopen the Strait of Hormuz, WSJ reports. Gonna be a busy 2-3 weeks.”
• CFTC Data up to 24/03/26 shows the Leveraged community continuing to add to their recently acquired short EUR exposure, -56 039(Last -49 544). Asset managers continue to pare back their core long exposure, +308 301(Last +317 076).
• Options : Closest significant option expiries for NY cut, based on DTCC data: 1.1450(EU2.65b), 1.1500(EU4.7b), 1.1700(EU2.78b). Upcoming Close Strikes : 1.1450(EU1.18b April 6), 1.1500(EU2.06b April 2), 1.1650(EU1.03b April 2) - BBG
• The EUR/USD Average True Range for the last 10 Trading days: 77 Points

Fig 1 : EUR/USD Spot Weekly Chart

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

Thailand’s manufacturing sector outperformed ASEAN excluding Singapore in March. Unlike most countries in the region, it posted an increase in activity growth with the index rising to 54.1 from 53.5, the highest since December. While March production and orders growth improved, the outlook deteriorated with the year ahead its most pessimistic in almost four and a half years. According to the S&P Global PMI, Thailand’s soft inflation position is yet to receive a boost from troubles in the Middle East with both input and output indices stable around the breakeven-50 level.

• Thailand subsidises fuel with a price cap but that has been increased due to the jump in global oil prices. However, there was also a reduction in government fuel excise. Therefore, it is unsurprising that the PMI showed input cost growth little changed on the month and producers actually marginally reducing selling prices, likely to be more competitive.
• The Future Output Index slumped over 13 points with respondents concerned about the impact of the Iran War on demand and prices.
• Strong orders growth drove production and increased capacity constraints with backlogs rising. However, staff levels fell marginally for the second straight month.
• The March manufacturing PMI is consistent with the ongoing recovery in production. The March release is late April. The Bank of Thailand’s business confidence measure for March prints later on Wednesday. 

Thailand S&P Global manufacturing PMI vs  production y/y% 3-mth ma

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

Headlines crossed a little while ago from the WSJ: "*UAE PREPARING TO HELP US OPEN HORMUZ BY FORCE: WSJ
*UAE LOBBYING FOR UNSC RESOLUTION TO AUTHORIZE ACTION: WSJ". See the full article at this link. 

• Risk sentiment is off earlier highs, with US equity futures paring gains back to 0.20-0.30%, while oil prices have ticked up. Both WTI and Brent are up over 1.5%. WTI is near $103/bbl.  
• The WSJ notes: "The U.A.E.'s participation in freeing the strait carries risks, including the potential for tension with Iran that could outlast the end of the war and damage to its critical infrastructure and economy."
• It adds: "The Emirati Foreign Ministry said there is "broad global consensus that freedom of navigation in the Strait of Hormuz must be preserved."
• This highlights that even if the US ceases hostilities with Iran, which has been hinted as coming from both US President Trump and Secretary of State Rubio in recent remarks, how and volumes in terms of trade and energy flows through the Strait of Hormuz may remain very uncertain.
• Note we have US President addressing the nation at 9pm Wednesday evening US time, with an update on the Iran conflict expected.