NZD: NZD/USD Edges Higher Ahead Of US Data Later, Ranges Tight

The Kiwi pushed drifted lower on Friday finishing the session down 0.24% at 0.6020. There session was relatively quiet with little in the way of local data or headlines while there was mixed messaging in the U. of Mich. Sentiment falling to 67.4 vs 76.2 est, from 77.2 in Apr, while headline sentiment missed expectations and pointed to a deteriorating consumer, the one-year inflation expectation metric rose to 3.5% from 3.2%, the highest since late 2023.

• The NZD/USD finished the Friday session towards the bottom of the daily range and spent most of the day trading within about 20-pips. The pair traded sideways the past week with the 100-day EMA acting as resistance, the 14-day RSI hovers above 50, while the MACD has started to print decreasing green bars. Early morning on Monday we trade down 0.05% at 0.6017.
• Key levels to watch: Initial resistance of 0.6044 (May 5 highs/100-day EMA) would be needed to test the of 0.6068 (200-day EMA), to the downside a clear break of 0.6000/6007 (round number support/ 50-day EMA) would open a move to 0.5981 (20-day EMA) and below here 0.5917 (May 2 lows).
• The US-NZ 2y is up 5bps to -13.5bps
• Option expiries: 0.5690 (NZD760m) while notable upcoming strikes are 0.5885 (NZD950m May 16), 0.5695 (NZD760m May 14), 0.5915 (NZD731.4m May 15)
• Looking ahead: Performance Services Index, Food Prices & 2Yr Inflation Expectation Today

• RES 3: 96.540 - High Feb 2 and a Key resistance
• RES 2: 96.506 - High Mar 11
• RES 1: 96.240 - High Apr 19
• PRICE: 96.010 @ 16:14 BST May 10
• SUP 1: 95.730 - 76.4% retracement of the Jan - Feb rally
• SUP 2: 95.480 - Low Oct 31
• SUP 3: 95.330 - 2.618 proj of the Feb 2 - Feb 14 - Mar 11 price swing

Prices gained on the back of the RBA rate decision early last week, topping the 96.00 handle in the process. Nonetheless, the trend condition in Aussie 3yr futures remains bearish despite recent strength. The recent leg lower following the break of 96.060, the Apr 17 / 18 lows, suggests potential for a continuation near-term, towards 95.730, a Fibonacci retracement point. Key short-term resistance has been defined at 96.240, the Apr 19 high. A break of this level would reinstate a bullish theme and refocus attention on gains towards 96.540, the Feb 2 high (cont).

USD/JPY starts the week near 155.70, slightly sub highs from late last week. We spent most of the post Asia close on Friday firming, but weren't able to breach the 156.00 level. Yen lost around 0.20% for Friday's session as the USD recovered some ground into the end of the week.

• Yen was comfortably the worst G10 performer last week, losing 1.75% against the USD, as the market bought dips in USD/JPY post the prior week's intervention induced pullback.
• Technically, gains are considered correction following the sharp retracement from above 160.00. 156.28, the May 2 high, is the near term upside focus. The 20-day EMA is at 154.46, while 151.65 is trendline support drawn from the Dec 28 low.
• The USD was supported, albeit modestly, post the University of Michigan sentiment release on Friday. While headline sentiment missed expectations and pointed to a deteriorating consumer, inflation expectations firmed - the one-year inflation expectation metric rose to 3.5% from 3.2%, the highest since late 2023. US yields finished higher across the benchmarks, with the front end slightly firmer (US 2yr to 4.87%, +5bps).
• The local data calendar just has Apr money stock figures on tap today. In the option expiry space note the following for NY cut later: Y155.00-15($2.4bln), Y157.45-50($1.4bln), Y157.65($901mln)
• From Friday, onshore media noted that PM Kishida is closely monitoring FX developments and that the government and the BoJ will work closely together (per NHK, see this link).