SGD: NEER Little Changed In Early Dealing, Foreign Reserves On Tap
The SGD NEER (per Goldman Sachs estimates) is little changed in early dealing, the measure remains well within recent ranges. We now sit ~0.7% below the upper end of the band.
- Broader greenback trends dominated flows for USD/SGD yesterday, the pair was pressured before support came in at the 200-Day EMA ($1.3503) before losses were pared after stronger than forecast US data. The pair last prints at $1.3530/40.
- Bulls first target the high from 30 June ($1.3573), a break through here opens the high from 30 Nov ($1.3765). Bears target a break of Tuesday's low, $1.3476, from here they can target the low from 15 June at $1.3361.
- On the wires today June Foreign Reserves will cross, there is no estimate the prior read was $325.74bn.
- Looking ahead next week the Advance read of Q2 GDP is down, a fall of 0.2% Q/Q is expected.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
NZD: Marginally Pressured, Ranges Narrow In Asia
NZD/USD prints at $0.6070/75, the pair is ~0.1% lower than opening levels.
- The pair has been marginally pressured in recent dealing, mild risk off flows have seen the Yen and USD advance whilst US Equity futures have retreated from session highs.
- NZD/USD met resistance ahead of $0.6090, however ranges do remain narrow as moves have had little follow through thus far.
- AUD/NZD sits little changed, the pair is consolidating below $1.10.
- Cross asset wise; e-minis are flat having been marginally firmer in early dealing. BBDXY is also little changed.
- Looking ahead on the wires tomorrow we have Q1 Manufacturing Activity, there is no estimate and the prior read was -0.4%Q/Q.
AUD: AUD/USD Off Highs, But Yields Differentials Trending Higher
AUD/USD sits slightly below session highs, the pair last 0.6675/80. We hit fresh highs earlier around 0.6690. Resistance at 0.6710, the May 16 high remains intact for now. Post RBA lows from Tuesday's session came in close to 0.6640.
- RBA Governor Lowe's speech and Q&A hasn't impact FX sentiment a great deal. The main hawkish message from yesterday's +25bps outcome, with potentially more to follow, was largely reiterated.
- AU yields are higher, with AU-US government bond yield differentials continuing to track in favor of the A$. The 2yr spread last at -62bps, close to YTD highs, while the 10yr spread is around +15bps, also close to YTD highs.
- The slight Q1 GDP miss (0.2% q/q, versus 0.3% expected) didn't impact sentiment.
- Some A$ weakness has likely filtered in from lower AUD/JPY levels. This pair has moved down from recent highs, last near 93.00. USD/JPY is offered slightly, while Japan equities were off more than 1% at one stage.
AUSSIE BONDS: Little Changed After Q1 GDP Miss, RBA Lowe Speech Weighs On Market
ACGBs are little changed (YM -4.0 & XM -2.0) after Q1 GDP slightly undershoots expectations, printing +0.2 q/q and +2.3y/y (0.3% & 2.4% est.). Nominal GDP grew by 2.1 per cent in Q1, and 9.2 per cent through the year. Compensation of employees increased by 2.4 per cent, following a 2.0 per cent rise in Q4.
- The GDP miss comes after RBA Governor Lowe's speech this morning reiterated the hawkish message embedded in yesterday’s surprise 25bp rate hike. He commented that the decision to increase minimum award wages by 5.75% was only one factor in the Board’s June decision. He added that increases should be in line with 2.5% plus productivity growth and so the latter is key in making larger pay rises sustainable and not inflationary. The other factors considered in June were overseas developments, domestic inflation, house prices, AUD, and Federal and state wage policies.
- Cash ACGBs are 2-3bp cheaper on the day. The AU-US 10-year yield differential is 4bp higher at +15bp.
- Swap rates are 1-4bp higher on the day.
- The bills strip is lower with pricing -2 to -7, late whites leading.
- RBA dated OIS pricing is 1-5bp firmer across meetings after the data with December leading.
