NZD: NZD/USD Falls After Stronger US CPI, FinMin Spoke On Budget Deficit
The Kiwi crept higher post RBNZ decision, making a high of 0.6083 before higher than expected CPI inflation data caused the USD to turn bid. NZ FinMin spoke earlier on the Deficit. The NZD was one of the worst performing G10 currencies down 1.37%, beaten by NOK, SEK & AUD while the BBDXY made new YtD highs of 1251.81 before finishing the session up 0.75% to 1,250.13.
- The NZD/USD fell sharply on as US CPI was released from 0.6083 to a intraday low of 0.5966 erasing the last weeks gains, the pair now targets the April 1 and YtD lows of 0.5940.
- Key levels to watch: Initial support is at 0.6040 (Apr 1 & YtD lows) below here then 0.5900 (round number support). Initial resistant lays at 0.6100 (round number resistance) a break here would open a move to 0.6025 (20-day EMA).
- The US-NZ 2y is now at multi-year highs of -8.5bps
- Earlier, New Zealand Finance Minister Nicola Willis outlined a strategy to address the government's structural deficit gradually over several years, aiming to reduce debt to 40% of GDP while focusing on sustainable spending and promising meaningful tax reductions within a new operating allowance to avoid inflationary pressures, while also emphasizing support for the Reserve Bank's efforts to stabilize inflation.
- Option expiries: Apr 10 NY Cut 0.5850 (NZD625m), upcoming notable strikes included 0.5955 (NZD1.22b April 11), 0.5750 (NZD610m April 12), 0.6050 (NZD550.4m April 12)
- Looking ahead: Today NZGBs Auctions, while Friday we have BusinessNZ Manufacturing PMI
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JPY: USD/JPY Can't Test Sub 146.50, USD Sentiment Stabilizes Somewhat On Yield Recovery
USD/JPY largely tracked sideways post the Asia close on Monday. We attempted to track sub 146.50 and test below Friday NY lows, but support was evident. Equally on the top side, moves above 147.00 drew selling interest. We track just under this level in early dealings today.
- Yen was the only G10 currency to rise against the USD for the session, albeit a very modest 0.07%. The BBDXY was around flat, near 1229.3, but other G10 currencies fell against the USD.
- For yen, focus remains on next week's BoJ meeting. Speculation is rising around a policy switch as soon as this meeting - with MNI Policy eyeing the potential for an undisclosed yield cap measure for JGBs should Japan exit negative interest rate policy this month (see this link for more details).
- The latest BBG survey on the BoJ outlook is here, 38% of respondents see a move next week, so not the majority but a big step up from the prior survey.
- US yields did climb during US trade, particularly at the front end, with the 2yr up 6bps to 4.54%. Focus is on the US CPI print later in the US session. The US yield move did lend some support to broader USD moves, helping drag the BBDXY slightly higher.
- On the data front today, we have the Feb PPI, along with the BSI industry and manufacturing survey for Q1.
- Also note the BoJ refrained from ETF yesterday, despite a decent equity market sell-off (see this BBG link).
- Finally, note the following expiries for NY cut later in the option space: Y147.40-60($759mln), Y148.25($1.9bln), Y149.00($630mln), Y151.50($2.2bln).
AUD: AUDUSD Finds Support at 66c, Surveys Coming Up
AUDUSD moved lower over much of Monday’s trading as higher US yields provided support to the USD later in the day. The pair tested 0.6600 briefly falling to a low of 0.6597 but is now down 0.2% to 0.6615. Generally weaker equities also weighed on the Aussie and it underperformed most of the G10. The USD index is flat.
- Last week’s recovery threatens the recent bearish theme as AUDUSD cleared resistance at 0.6595, which signals scope for a continuation higher. Initial resistance is at 0.6668, March 8 high, and support at 0.6566, 50-day EMA.
- AUDJPY is down 0.3% to 97.19 after falling to 96.90. AUDNZD found support at 1.07 and is now down 0.1% at 1.072. AUDEUR is down 0.1% to 0.6054 and AUDGBP +0.2% to 0.5162.
- Equities were generally weaker with the S&P down 0.1% and the Euro stoxx -0.6%. Oil prices were higher with Brent up 0.5% to $82.46/bbl. Copper is 1% higher and iron ore is down to just above $107/t.
- NAB business confidence and CBA household insights for February print today.
USDCAD TECHS: Bear Threat Remains Present
- RES 4: 1.3729 76.4% retracement of the Nov 1 - Dec 27 bear leg
- RES 3: 1.3661 High Nov 27
- RES 2: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
- RES 1: 1.3513/3606 20-day EMA / High Feb 28 and the bull trigger
- PRICE: 1.3484 @ 16:33 GMT Mar 11
- SUP 1: 1.3420 Low Mar 8
- SUP 2: 1.3359 Low Jan 31 and key S/T support
- SUP 3: 1.3343 Low Jan 12
- SUP 4: 1.3288 Low Jan 5
USDCAD traded lower last week as the pair extended the short-term reversal from 1.3606, the Feb 28 high. Key support lies at 1.3359, the Jan 31 low and a break of this level would be seen as a bearish development. Initial firm support to watch lies at 1.3441, the Feb 22 low. It has been pierced and a clear break would open 1.3359. On the upside, the bull trigger is at 1.3606, the Feb 28 high, where a break is required to reinstate a bullish theme.
