FOREX: Modest NZD Outperformance, 0.5800 Support Intact
Sep-25 09:25
- While moves remained contained across G10 FX, both AUD and NZD are modest outperformers on Thursday, rising around 0.3%. This has allowed NZDUSD to edge away from key 0.5800 support, having printed a 0.5808 low overnight.
- We continue to flag this psychological pivot level, which coincides with the 50% retracement of the year’s range. Recent weakness has been exacerbated by the break of a short-term trendline and should we break the figure, 0.5728 and 0.5636 would be the most obvious targets for a deeper selloff.
- KiwiBank expect a 50bps cut in October from the RBNZ, followed by a 25bps cut in November, with the cash rate ending the year at 2.25%. From there, KiwiBank think there’s about a 50/50 chance of a further move to 2% in February.
- They believe the Kiwi may trade with a downward bias from here as 75bps of easing is not yet fully priced into rates markets. They wouldn’t be surprised to see NZDUSD on a 0.57 handle and a move towards 1.15 for AUDNZD is likely.
Source: Bloomberg Finance L.P. / MNI
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FOREX: USD Recovers Following Trump-Cook Inspired Dip
Aug-26 09:20
- Volatility in currency markets Tuesday was stoked by President Trump declaring he was firing Federal Reserve governor Lisa Cook “effective immediately”, in an escalation of the US president’s attacks on the central bank. The immediate impact was dollar negative, with USDJPY bearing the brunt of the move, depreciating around 90 pips in the aftermath.
- This allowed USDJPY to trade down to 147.00, reversing much of Monday’s ascent. However, weakness was short-lived as the dollar began to reverse on potential safe haven demand, while Governor Cook stating that she will not resign and will continue to carry out her duties may have also exacerbated the dollar’s full intra-day reversal.
- FX futures volumes are healthy - likely a result of the catch-up after the UK bank holiday on Monday: GBP, JPY futures see volumes of 40%-80% above average, but EUR futures are the standout: heavy trade through Asia-Pac saw total activity over double what might be expected in at this stage of the trading day.
- Overall, the dollar index’s resilience to start the week has seen the majority of Powell's dovish JH inspired selloff reverse. Activity is also backed up by WSJ's overnight report that China have sent a "senior" trade negotiator to the US - a likely signal that a trade deal can be reached that could unlock a Trump-Xi Jinping summit in the near future.
- While the EURUSD’s fall this week is reflective of broader greenback themes, political uncertainty has also ratcheted up following French Prime Minister Francois Bayrou’s plan to call a confidence vote. The trend set-up in EURUSD remains bullish and short-term weakness is for now considered corrective. Support at the 50-day EMA remains intact, at 1.1597. A clear break of it would signal scope for a deeper retracement and potentially expose key support at 1.1392, the Aug 1 low.
- US durable goods, consumer confidence and Richmond manufacturing data are all due later in the session. ECB’s Villeroy, BOE’s Mann and BOC Governor Macklem are all due to speak.
AUSTRIA T-BILL AUCTION RESULTS: 2-Month RATB / 3-Month Green RATB
Aug-26 09:17
| Type | 2-month ATB | 3-month Green ATB |
| Maturity | Oct 30, 2025 | Nov 27, 2025 |
| Allotted | E863mln | E1.68bln |
| Previous | E793mln | E758mln |
| Amount | E1bln | E2bln |
| Target | E1bln | E2bln |
| Previous | E1bln | E1bln |
| Avg yield | 1.980% | 1.940% |
| Previous | 1.990% | 1.935% |
| Bid-to-cover | 1.83x | 1.78x |
| Previous | 1.86x | 1.99x |
| Bid-to-offer | 1.58x | 1.5x |
| Previous | 1.48x | 1.51x |
| Previous date | May 27, 2025 | Jul 22, 2025 |
SONIA OPTIONS: Latest Option trades
Aug-26 09:17
- SFIZ5 96.20/96.30/96.40/96.50c condor vs 96.05p, sold at flat down to -0.25 in 6k.
- 0NZ5 96.60/97.00/97.40c fly, bought for 5 in 2.5k.
