SGD: NEER Little Changed, CPI On Tap
The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing and sits a touch off its highest level since 10 Aug. The measure is ~0.7% below the top of the band.
- Broader greenback trends continue to dominate flows as USD/SGD continues to edge lower while narrow ranges persist. The pair is a touch lower this morning and last prints at $1.3560/65.
- The pair remains in an uptrend, bulls immediate focus is on the high from 17 Aug ($1.3625), from here they can target the high from 30 Nov 22 ($1.3765). Bears focus on the 20-Day EMA ($1.3497).
- On the wires today we have July CPI, headline CPI is expected to tick lower to 4.2% Y/Y and Core to 3.8% Y/Y.
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AUD: A$ Range Trading, Down Against Yen
AUDUSD has been under pressure during the APAC session but is close to flat at 0.6727 after an intraday low of 0.6715, below initial support of 0.6719, the 50-day EMA. China/HK equities are weaker. The USD index is flat.
- Aussie is down against the major crosses, except kiwi. AUDJPY is 0.3% lower at 95.13 while AUDNZD is 0.1% higher around 1.0919. AUDEUR is down slightly to 0.6046 and AUDGBP -0.1% to 0.5231.
- Judo Bank preliminary July PMIs showed that activity contracted in the month driven by services but price pressures rose. See MNI PMIs Show Rising Inflation Trends As Activity Shrinks.
- Equity markets are mixed with the ASX up slightly, the Nikkei +1.2% but the Hang Seng down 1.2%. S&P e-minis are flat. Oil prices are down due to the upcoming Fed meeting with Brent -0.5% to $80.63/bbl. Copper is up 0.3% and iron ore is higher at above $113.50/t.
- Later the US preliminary S&P Global PMIs for July and the June Chicago Fed index print. There are also European preliminary July PMIs.
NZD: Marginally Pressured In Asia
NZD/USD prints at $0.6155/60, the pair is ~0.2% lower in Asia today.
- The kiwi is marginally pressured today as a bid in USD/JPY spillover into mild USD strength and lower regional equities weigh on risk sentiment.
- NZD/USD remains well within the July range with moves having little follow through thus far.
- AUD/NZD briefly dealt below $1.09 in early dealing however the pair is now sitting ~0.1% firmer.
- Jun Trade Balance was on the wires early this morning printing a small surplus of $9mn, the 12mth YTD Trade Balance has narrowed to a deficit of $15.98bn.
- Cross asset wise; BBDXY is a touch firmer and the Hang Seng is ~1% lower. US Tsy Yields are a touch firmer.
- A thin docket for the remainder of the session leaves wider swings in risk sentiment as the main driver in NZD.
AUSSIE BONDS: Slightly Stronger, Narrow Range, Q2 CPI Wednesday
ACGBs (YM +2.0 & XM +0.5) are slightly richer after trading in a narrow range in the Sydney session. There hasn’t been much local data other than the preliminary Judo Bank PMI data. The composite index showed that activity contracted in July for the first time since March driven by weaker services performance due to higher rates. Judo Bank believes the data continues to point to a soft landing, as it sees “no signs of impending recession”.
- US tsys are holding marginally cheaper in today’s Asia-Pac session with ranges narrow.
- Cash ACGBs are 1-2bp richer with the AU-US 10-year yield differential -1bp at +16bp.
- The 3s10s swap curve has twist steepened with rates -2bp to +1bp.
- The bills strip has bull steepened with pricing +1 to +2.
- RBA-dated OIS pricing 1-3bp softer across meetings. A 59% chance of a 25bp hike is priced for August.
- (AFR) Stubbornly high residential rents are expected to have an outsized influence on Wednesday’s quarterly inflation figures and feed into the Reserve Bank’s August cash rate decision as it approaches the top of its monetary tightening cycle, economists say. (See link)
