NZD: NZD/USD - Breaks Its Support, Focus Now Turns To 0.5850
The NZD/USD had a range overnight of 0.5939 - 0.6006, Asia is trading around 0.5945. The USD has surged higher on the back of the US CPI showing clear signs that tariffs are beginning to impact the core goods data. US yields and the USD have both reacted as the market further reduces rate cut expectations for the year. Risk is opening on the backfoot this morning, E-Mini -0.20%, NQ -0.20%. NZD/USD has broken below its recent support just below 0.6000 and the price action now suggests we could have a look back towards the important 0.5850 support area. Look for supply now on bounces back towards 0.6000 to cap initially.
- NZ Milk Prices Rise At Auction For The First Time Since May : Overnight the fortnightly whole milk powder auction saw prices rise 1.7% versus the previous auction result, per GDT. This put prices back to $3928, from $3859 prior.
- (Bloomberg) -- “New Zealand's 2Q CPI Uptick Won't Prevent Further RBNZ Rate Cuts. There's upside risk to our forecast for a softer 2Q inflation reading in New Zealand. The uptick in inflation should be short-lived, and won't prevent the RBNZ from delivering more support for growth with further reductions in the official cash rate.”
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6000(NZD382m). Upcoming Close Strikes : 0.5932(NZD317m July18). - BBG
- CFTC Data shows Asset Managers added slightly to their newly built longs in NZD +9229, the Leveraged community added slightly to their shorts last week -8654.
- Data/Event : Non Resident Bond Holdings
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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ASIA: Government Bond Issuance
- Bank of Korea to Sell KRW500bn 91-Day Bonds
- South Korea to Sell KRW2.2tn 10-Year Bonds
- Thailand to Sell THB30bn of 182-Days Bills
- Philippines To Sell PHP 8.0Bln 91D Bills (PH0000059263)
- Philippines To Sell PHP 8.0Bln 182D Bills (PH0000059651)
- Philippines To Sell PHP 9.0Bln 364D Bills (PH0000060485)
ASIA: Coming Up in Asia Today
| 0230GMT | 0930HKT | 1130AEDT | CHINA New Home Prices MoM MAY |
| 0230GMT | 0930HKT | 1130AEDT | CHINA Used Home Prices MoM MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Retail Sales YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Retail Sales YTD YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Industrial Production YTD YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Industrial Production YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Fixed Assets Ex Rural YTD YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Surveyed Jobless Rate MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Property Investment YTD YoY MAY |
| 0300GMT | 1000HKT | 1200AEDT | CHINA Residential Property Sales YTD YoY MAY |
| 0400GMT | 1100HKT | 1300AEDT | South Korea Money Supply L SA MoM APR |
| 0400GMT | 1100HKT | 1300AEDT | South Korea Money Supply M2 SA MoM APR |
| 0400GMT | 1100HKT | 1300AEDT | Indonesia External Debt APR |
| 0730GMT | 1430HKT | 1630AEDT | Indonesia Wholesale Prices YoY MAY |
OIL: Oil Jumps In APAC Trading After Israel Attacks Iranian Energy Facilities
Oil jumped on the first Israeli strikes against Iran in early Friday APAC trading but then eased substantially but still finished up around 8% on the day. On the weekend the situation escalated with Israel targeting Iran’s oil and gas infrastructure, which has pushed crude higher again at the start of today’s session with WTI up 2.9% to $75.06/bbl but peaked at $77.49. Strikes between the two continued unabated over the weekend. The USD index rose 0.2%.
- Israel struck the Shahran fuel depot and Shahr Rey refinery in Tehran destroying both but has avoided the Kharg Island terminal so far which is Iran’s main oil export facility and would also disrupt shipments from the UAE and Saudi Arabia having significant impact on oil prices, according to The Australian. The NY Times has said that the oil ministry office in Tehran was struck likely as an attack on engineering resources.
- The destruction of oil infrastructure is a major blow to Iran as not only does it impact its revenue flows in the near-term but repairing and rebuilding is a long-term process. The risk is that it retaliated by closing the Strait of Hormuz which 30% of global seaborne oil transits through.
- WTI rose 7.6% to $73.18/bbl on Friday after reaching a high of $77.62 early in APAC trading. It is now up 24.6% this month.
- Brent was 8.4% higher at $75.18/bbl but off the intraday high of $78.50 and has started today up 3.4% to about $76.74 after rising to $78.32 initially. It is around 22% higher in June. The bull cycle remains in play and Friday’s intraday high is now initial resistance. Technicals are signalling that the trend is currently in an extreme overbought position.
