AUSTRALIA: NAB Expects Employment To Bounce Back
NAB “sees employment bouncing back by 40K after last month’s sample-affected read of -40.9K (consensus +30K), and for the unemployment rate to fall a tenth to 3.3% (consensus 3.4%).”
- “With the RBA’s August SoMP forecasts seeing unemployment around 3.4%, such an outcome would still be consistent with a downshift in the pace of hikes. A larger fall in unemployment to say 3.2% though would argue the RBA needs to remain aggressive and add to the upside risks on wages.”
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JGBS: Futures Firm Overnight, JGB Supply Due
JGB futures added 16 ticks in overnight dealing, building on the uptick observed in the Tokyo afternoon as U.S. Tsys rallied on the back of softer than expected second tier U.S. data.
- There hasn’t been much in the way of meaningful domestic news flow to dissect since yesterday’s Tokyo close, with domestic political conditions and fiscal support packages re: the fight against inflation still providing the focal the focal points early this week.
- 5-Year JGB supply headlines the domestic docket today.
KRW: 1 Month USD/KRW Tests Resistance Around 1315
1 month USD/KRW spent most of the post Asia close gravitating higher, in line with broader USD strength, particularly USD/CNH. We got close to 1315, which is around highs from early August/late July. We ended the NY session around the 1313 level. Solid support looks evident at the 50-day MA, which comes in at 1299.72. Note onshore markets re-open today, on Friday onshore spot closed at 1302.45, so there will be some early catch up today.
- The lead from offshore equities is positive, with US markets posting modest gain. On the tech front, the SOX and MSCI IT index also rose, maintaining positive momentum from late last week.
- This backdrop is set against China's weaker data outcomes yesterday, which will weigh on the regional outlook, all else equal. Net equity inflows into Korean markets slowed last week, although remained positive ($120mn).
- The domestic data calendar is empty today, but the focus could be on geopolitics with the US and South Korea kicking off preliminary military drills ahead of a large exercise next week (22nd August to 1 September). Both countries, along with Japan, also conducted a joint missile defence exercise in Hawaii.
- North Korea's reaction/response will be a potential focus point for markets, although rhetoric this year hasn't moved market sentiment a great deal.
- If 1 month USD/KRW breaks above 1315/1316 the next upside target will be above 1320, while mid-July cyclical highs coming in just under 1330. Such a move is likely to create intervention/jaw boning risks from the authorities though.
NZD: Kiwi Goes Offered Amid Softer Commodity Complex
NZD/USD lost ground Monday as the kiwi dollar faltered alongside its commodity-tied peers, while the greenback gained on safe-haven demand.
- Weak activity data released out of China applied pressure to the Antipodean currencies and was followed by a miss in U.S. Empire M'fing Index, which further dented risk sentiment.
- The commodity complex was weaker, with the aggregate Bloomberg Commodity Index down ~1.5% on the day. However, equities traded on a firmer footing post-Asia, while the VIX index gave back the bulk of its early advance.
- NZD/USD last trades at $0.6363, down 4 pips on the day. Bears keep an eye on $0.6192, which limited losses on Jul 27. Bulls look for a recoil above Aug 12 high of $0.6468.
- CoreLogic said the proportion of residential properties being sold at a loss increased for the second consecutive quarter, suggesting that the market has reached a "turning point."
- Reminder that the RBNZ will announce its monetary policy review this Wednesday (our preview is forthcoming) and is widely expected to raise the OCR by a further 50bp. The OIS strip fully prices such a scenario.
