MNI EUROPEAN OPEN: Antipodean FX Surges, USD Steady Elsewhere

Apr-15 05:33By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

BESSENT SAYS TREASURY HAS BIG TOOLKIT IF NEEDED FOR BONDS - BBG
TRUMP INITIATES CHIPS AND DRUG PROBES, AHEAD OF MORE TARIFFS - BBG
FED IN PAUSE MODE AMID HIGH UNCERTAINTY - BOSTIC - MNI BRIEF
JAPAN'S KATO DENIES EXTRA BUDGET PLAN AMID BOND YIELD SURGE - BBG
RBA DOUBTFUL OVER TARIFF IMPACT ON GDP - MINUTES - MNI BRIEF

Fig 1: NZD/USD Above Its Simple 200-day MA

Source: MNI - Market News/Bloomberg

CONSUMER (BBG): “UK households increased their spending in March as consumer demand defied an imminent rise in household bills, according to reports from the British Retail Consortium and Barclays.”

ECB (MNI ECB WATCH): The European Central Bank is set to lower its deposit rate by 25 basis points to 2.25% on Thursday, cutting for a sixth consecutive meeting as volatile markets await the outcome of a 90-day partial tariff reprieve announced by U.S. President Donald Trump.

US/RUSSIA (BBG): “There’s a possibility to reshape the US-Russia relationship through compelling commercial opportunities, US Envoy Steve Witkoff tells Fox News in an interview.”

TRADE (BBG): “European Commissioner for Trade and Economic Security Maros Sefcovic met with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer today in DC, “seizing the 90-day window for a mutual solution to unjustified tariffs,” he says in a post on X.”

UKRAINE (BBG): “ President Donald Trump continued to blame Ukraine’s President Volodymyr Zelenskiy for the war in Ukraine amid questions about which side is responsible for the failure to achieve the ceasefire Trump has promised to deliver.”

TARIFFS (BBG): “President Donald Trump’s administration pressed forward with plans to impose tariffs on semiconductor and pharmaceutical imports by initiating trade probes led by the Commerce Department.”

TARIFFS (RTRS): “Big Tech and auto shares rose after the U.S. removed smartphones and other electronics from its tariffs on China over the weekend, and after President Donald Trump added new wrinkles into his vacillating trade policy on Monday by suggesting he might grant exemptions on auto-related levies already in place.”

MARKETS (BBG): “Treasury Secretary Scott Bessent played down the recent selloff in the bond market, rejecting speculation that foreign nations were dumping their holdings of US Treasuries, while flagging that his department has tools to address dislocation if needed.”

FED (MNI BRIEF): Atlanta Fed President Raphael Bostic said Monday the Fed is in a "pause position" while it waits for more clarity on where the economy is headed, noting businesses are saying things to the same effect.

FED (MNI): Federal Reserve Governor Christopher Waller on Monday called for "flexible" monetary policy ranging from significantly lowering interest rates when faced with the threat of a recession to holding rates higher for longer in response to how President Trump's tariff policies evolve, while also maintaining his view that the inflationary effects of tariffs are likely to be temporary.

FED (MNI INTERVIEW): Inflation Uncertainty Deters Fed Easing -Evans

MARKETS (MNI INTERVIEW): MNI INTERVIEW: U.S. Safe-Haven Status Under Pressure - Liang

INFLATION (MNI BRIEF): The New York Fed's survey-based measure of year-ahead consumer inflation expectations jumped 0.45 pp to 3.58% in March, the highest since September 2023, while the three-year-ahead measure was unmoved at 3.00% and the five-year-ahead declined a tenth to 2.86%.

OTHER

AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia monetary policy board doubted increasing global tariffs would have a significant impact on domestic economic growth, despite acknowledging this could change, according to the published minutes from the April 1 decision.

SOUTH KOREA (RTRS): “South Korea announced on Tuesday an increase in its support package for the country's vital semiconductor industry to 33 trillion won ($23.25 billion), up about a quarter from a 26 trillion won package unveiled last year.”

JAPAN (BBG): "Japanese Finance Minister ruled out the idea of compiling an extra budget, pushing back against market speculation that has driven up the nation’s government bond yields."

CHINA

TRADE (BBG): “ The volume of goods processed by Chinese ports slowed last week for the first time since the Lunar New Year holiday — a trend that will undercut the value of exports going forward if it continues.”

DEPOSIT RATES (YICAI): “Some Chinese joint-stock banks and smaller lenders have cut deposit rates recently with mid- and long-term rates lowered by 10 to 50 basis points, according to a report by Yicai, without specifying where it got the information.”

HOUSING (ECONOMIC INFORMATION DAILY): "More cities will further relax home purchase and sales restrictions in Q2, and boost land transfer and affordable housing construction to stabilise the property market, the Economic Information Daily reported, citing expectations from Chen Wenjing, research director at China Index Academy."

GDP FORECAST (BBG): "UBS AG added to a series of growth downgrades for China with the most pessimistic forecast among major banks, predicting the economy will expand just 3.4% this year as US tariffs choke exports."

CHINA MARKETS

MNI: PBOC Net Drains CNY102.9 Bln via OMO Tuesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY164.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY102.9 billion after offsetting the maturities of CNY267.4 billion reverse repos. There is another CNY100 billion 1-year MLF maturing today, according to Wind Information.

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6488% at 09:38 am local time from the close of 1.7039% on Monday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on Monday, compared with the close of 47 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.2096 Tues; -0.85% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.2096 on Tuesday, compared with 7.2110 set on Monday. The fixing was estimated at 7.3075 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND MARCH FOOD PRICES M/M 0.5%; PRIOR -0.5%

SOUTH KOREA FEB MONEY SUPPLY M2 M/M 0.6%; PRIOR 0.5%

MARKETS

US TSYS: Yields Drift Lower in Today's Asia-Pac Session

TYM5 has traded in a tight 110-19/110-27+ range so far in today's Asia-Pac session. Going into the London open, it is dealing near its highs around 110-26,+0.02 from its close.

The US 10-year yield has continued to drift lower in a tight range of 4.3408 - 4.3856 in Asia. Going into the London open dealing around 4.3485%.
The market is starting to realise the FED will not be stepping in to rescue it by cutting rates, as long as it expects inflation to track higher on the back of Trump’s policies.
The Fed’s Waller said yesterday the impacts of the tariffs on inflation would be temporary. He also described the new policy as “ one of the biggest shocks” on the US economy in decades, the effects of which are highly uncertain.
Bostic spoke after the US market close: ”Right now range of possible outcomes has multiplied. Inflation still much higher than target. Not in position to boldly move in any direction, need more clarity.”
Bessent says the Treasury has a big toolkit if needed for Bonds.
Dips in the 10-year yield back towards 4.25/30% should now find supply, any move back to 5% and above would become problematic for equities.
Upcoming Data/Events: Retail Sales and Fedspeak from Powell on Wednesday.

AUSSIE BONDS: Follow US Tsys Into A Bull-Flattener, RBA Remains Cautious

ACGBs (YM +2.0 & XM +7.0) are showing a bull flattener in today’s Sydney session.

The release of the RBA Minutes for the April Meeting was the key domestic driver. The Board judged that economic conditions were broadly in line with forecasts, with inflation gradually declining and the labour market still tight.
Risks to the outlook were seen as balanced, including global trade uncertainty and domestic factors like wages and productivity.
Given this, the Board decided to keep the cash rate unchanged, emphasising the need for caution. Future decisions will depend on incoming data, especially on inflation, employment, and global developments.
Cash US tsys are flat to 4bps richer, with a flattening bias, in today's Asia-Pac session.
Cash ACGBs are 1-7bps richer with the AU-US 10-year yield differential at -2bps.
The bills strip has bull-flattened, with pricing flat to +6.
RBA-dated OIS pricing is flat to 3bps softer across meetings today. A 50bp rate cut in May is given a 36% probability.
Tomorrow, the local calendar will see the Westpac Leading Index, ahead of March’s Employment Report on Thursday.
The AOFM plans to sell A$1000mn of the 3.50% 21 December 2034 bond tomorrow.

BONDS: NZGBS: Sharp Bull-Flattening In Line With US Tsys

NZGBs closed at session highs in a bull-flattening move, with benchmark yields falling 5–15bps across the curve.

The short end underperformed, partly due to a sharper rise in NZ food prices, which climbed 3.5% in the year to March 2025, up from 2.4% in February. Stats NZ attributed the increase primarily to higher prices in the grocery food and meat, poultry, and fish categories, which rose 5.1% and 5.3%, respectively.
Meanwhile, the long end found support from US tsys. Cash US tsys has bull-flattened during today's Asia-Pacific session, with yields flat to 4bps lower. The US calendar is light today, with attention turning to retail sales and remarks from Fed Chair Powell on Wednesday.
Swap rates closed flat to 9bps lower, with the 2s10s curve flatter.
RBNZ dated OIS pricing closed 1-2bps firmer across meetings. 30bps of easing is priced for May, with a cumulative 78bps by November 2025.
Tomorrow, the local calendar will see Non-Resident Bond Holdings data, ahead of Q1 CPI on Thursday.
On Thursday, the NZ Treasury plans to sell NZ$275mn of the 3.00% Apr-29 bond and NZ$225mn of the 4.25% May-36 bond.

FOREX: FX Wrap - USD Move Lower Pauses

The BBDXY has had a tight Asian range of 1229.25 - 1232.89. The move lower is starting to show signs of at least slowing down. The USD has looked in real trouble as a rotation out of US assets seems to be gathering momentum and normal correlations with yield are breaking down.

EUR/USD - Asian range 1.1316 - 1.1361, dipped initially on the Asian open but it has since bounced off its lows dealing around 1.1355 going into London. EUR/USD had been trading very closely with the 10 year rate differential, this relationship broke down completely last week. Traders are targeting a move back to 1.2000 in the Euro as the USD’s safe haven role is reassessed. See graph below.
GBP/USD - Asian range 1.3164 - 1.3215, dealing right at the day's highs going into the London session. GBP has been playing catch up to the broad USD weakness.
USD/CNH - Asian range 7.3074 - 7.3189, the USD/CNY fix was slightly lower at 7.2096. USD/CNH goes into the London open dealing around 7.3120.
USD/JPY - Asian range 142.94 - 143.59, bounced from the open making its highs into the Japanese fix. It has since drifted lower for most of the session going into London back around 143.00. Huge support is eyed around 140, a break here could see the move really accelerate.
Cross asset : SPX Futures -0.15%, Gold 3229.50, US 10yr 4.35%, BBDXY 1229, Crude oil 61.77.
Data/Events : UK unemployment, FR CPI, ECB Lending Survey, Ger ZEW, Empire State Man survey.

Fig 1: EUR/USD Weekly Chart

Source: MNI - Market News/BBG

FOREX: Antipodean Wrap - AUD & NZD Make New Gains

The AUD and NZD have both traded bid once more making new highs in Asia. In its minutes The Reserve Bank of Australia expressed caution over future interest-rate cuts, saying May would be an "opportune time" to revisit policy settings. The board will have additional data on the labor market, inflation, household spending, and global trade policies by the May 19-20 meeting, which would have a considerable bearing on the decision.

AUD/USD - Asian range 0.6316 - 0.6355, AUD has traded quietly bid for most of the Asian session, breaking the overnight highs and going into the London open at the top of its range. Shorts will be hoping for sellers to return but will be watching the 0.6400 area this week for signs of the next leg of position squaring.
AUD/JPY - Asian range 90.38 - 91.01, AUD/JPY was bid from the open and has drifted higher for the majority of the Asian session. Price goes into the London open around 91.00 pressing its highs. AUD/JPY is trying to build a base as risk stabilises, but it remains to be seen if it can this last. Expect supply once more back towards the pivotal 94.00 area.
NZDUSD - Asian range 0.5861 - 0.5915, NZD has traded bid the whole session and there is still very little pullback. NZD printing around 0.591/5/20 going into London, having made new highs in the session.
AUD/NZD - Asian range 1.0734 - 1.0779, the cross drifted lower in the Asian session before finding some buyers towards the 1.0740 area. The cross is going into London pretty directionless but the bias appears to remain for the upside to be capped, as liquidity in the NZD dries up quicker than for the AUD on any move higher.

Fig 1: AUD/USD Daily Chart

Source: MNI - Market News/BBG

ASIA STOCKS: Strong Regional Rally With China Down.

A BBG report suggests that the escalating trade war is having a material impact on the money investors have placed in Chinese ETFs. Data suggests that US$3.6bn has been withdrawn in early April following the imposition of tariffs.

Alibaba and Tencent backed Zhipu has begun an initial public offering as soon as this year, angling to become the first of several prominent ChatGPT-competitors to tap public markets.

Many of Asia’s bourses rose today with the US President floating a potential tariff pause, giving autos a reprieve.

China’s bourses were the exception today. As the Hang Seng edged higher by +0.20%, the onshore bourses drifted lower with CSI 300 down -0.07, Shanghai down -0.07 and Shenzhen down -0.48%
The KOSPI had a very strong day today rising +1%, following on from yesterday's gain of +0.95%.
Singapore’s FTSE Straits Times was one of the regions best performers rising +1.8%, following yesterday’s gain of +1.04%.
Malaysia’s FTSE Bursa Malaysia KLCI is holding onto modest gains of +0.20% following yesterday's outsized rally of +1.79%.
The Jakarta Composite is up yet again and continues to perform well, rising +1.3% today, from yesterday’s gains of +1.70%.
India’s NIFTY 50 has risen +2.1% in early trading, following on from yesterday’s gains of +1.92%.

OIL: Three Straight Days of Gains for Oil

With ongoing discussions between the US and Iran whilst OPEC cut their forecasts for 2025 and 2026, oil has had a lot to digest.
OPEC forecasts an increase of 1.3m barrels a day, a reduction of 100k a day as trade war uncertainty weighs on global growth prospects.
WTI opened at US$61.58, and delivered a third straight day of gains, rising to $61.68
Brent opened at $64.86, and has rallied to $65.02.
The global oil market faces “large surpluses” this year and next as the trade war weighs on crude demand growth and OPEC+ eases supply curbs, according to Goldman Sachs. (source BBG)
JPMorgan has lowered their year end price forecast with Brent to $66 bbl and WTI to $62 bbl
UBS cut theirs also with Brent to $68
Hedge funds slashed net-long Brent positions by the most on record in the week to April 8 following the tariff chaos (source BBG)

GOLD: The Rally Returns for Gold.

Having hit new highs, yesterday saw gold slip lower into the close as profit taking on strong gains was evident yet in the Asian trading day, the rally continued.
Gold opened at $3,210.93 and had a slow start to the trading day before jumping to $3,228.33, a gain of +0.54%
South African miner Gold Fields Ltd has been ordered to stop mining its lease and leave one of its mines in Ghana after the rejection of a lease extension.
West Australian miner Bellevue Gold is the target of several takeovers as the soaring cost of gold eats into its cashflow due to soaring hedge costs.
The PBOC is offering increased quotas to banks for gold imports to meet the domestic demand from institutional and retail investors.
Gold remains steadfast above all major moving averages with the nearest, the 20-day EMA, at $3,091.86

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
15/04/2025	0600/0700	***	GB	Labour Market Survey
15/04/2025	0645/0845	***	FR	HICP (f)
15/04/2025	0800/1000	**	EU	ECB Bank Lending Survey
15/04/2025	0900/1100	**	EU	Industrial Production
15/04/2025	0900/1100	***	DE	ZEW Current Expectations Index
15/04/2025	0900/1000	**	GB	Gilt Outright Auction Result
15/04/2025	1215/0815	**	CA	CMHC Housing Starts
15/04/2025	1230/0830	***	CA	CPI
15/04/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/04/2025	1230/0830	**	US	Import/Export Price Index
15/04/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/04/2025	1255/0855	**	US	Redbook Retail Sales Index
15/04/2025	1300/0900	*	CA	CREA Existing Home Sales
15/04/2025	1530/1130	**	US	US Treasury Auction Result for 52 Week Bill
15/04/2025	2310/1910		US	Fed Governor Lisa Cook
16/04/2025	2350/0850	*	JP	Machinery orders
16/04/2025	0200/1000	***	CN	Fixed-Asset Investment
16/04/2025	0200/1000	***	CN	Retail Sales
16/04/2025	0200/1000	***	CN	Industrial Output
16/04/2025	0200/1000	***	CN	GDP
16/04/2025	0200/1000	**	CN	Surveyed Unemployment Rate M/M
16/04/2025	0600/0700	***	GB	Consumer inflation report
16/04/2025	0800/1000	**	EU	EZ Current Account
16/04/2025	0800/1000	**	IT	Italy Final HICP
16/04/2025	0900/1100	***	EU	HICP (f)
16/04/2025	1000/1100	**	GB	Gilt Outright Auction Result
16/04/2025	1100/0700	**	US	MBA Weekly Applications Index
16/04/2025	1230/0830	***	US	Retail Sales
16/04/2025	1315/0915	***	US	Industrial Production
16/04/2025	1345/0945	***	CA	Bank of Canada Policy Decision