NZD: NZD/USD - Consolidates Ahead Of NFP

The NZD had a range overnight of 0.5992 - 0.6044, Asia is trading around 0.6035. The USD sell-off that began in Asia was extended overnight and the AUD and NZD have both been big beneficiaries as they both gain over 1%. The NZD is breaking above multiple previous highs potentially signaling an extension higher. 

• (Bloomberg) - “China is gaining ground against the US in their trade standoff as Beijing’s grip on chip supply chains and rare earths boosts its leverage, according to Trivium China. Donald Trump and Xi Jinping will “likely” speak this week, the White House said. The US confirmed it’s extending the tariff pause on some Chinese goods to Aug. 31.”
• “The dollar fell against all of its Group-of-10 peers, extending losses after the release of weaker-than-expected US manufacturing data and as hedge funds bolster short exposure.”(BBG)
• The NZD is attempting to break out its recent range, the hawkish slant from the RBNZ last week only saw a slight paring back of short positions. Should the NZD sustain a clear break back above 0.6050 you could see some of these reduced even further.
• The support back towards 0.5800/50 has held very well, and while this continues to hold expect buyers to be around on dips. A clear break above 0.6050 could provide the spark for the next leg higher.
• CFTC Data showed Asset managers maintaining their shorts, while the leveraged community pared back only a little of the decent short they had initiated the week before.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6100(NZD375m). Upcoming Close Strikes : 0.5900(NZD401m June 4)

• Data/Event : Terms of Trade

  Fig 1: NZD/USD Spot Daily Chart

  

  Source: MNI - Market News/Bloomberg

Oil prices continued the trend higher started in APAC trading in the European session. They finished significantly higher with the day’s highs breaking above 50-day EMAs. The move was helped by an increase in geopolitical tensions on a number of fronts, a drop in the US dollar (USD BBDXY -0.6%) and relief that OPEC didn’t hike output more than expected. There was also an unwinding of shorts made ahead of the weekend’s OPEC meeting. 

• WTI ended 3.7% higher at $63.04/bbl after a high of $63.88, breaking above the 50-day EMA at $62.47 opening up $65.82, key resistance. It has started today slightly higher at $63.05.
• Brent rose to a peak of $65.76/bbl, above the 50-day EMA at $65.31, but finished at $65.08 to be up 3.7%. Recent gains still seem to be corrective but if a break of the 50-day EMA is sustained then that could signal a stronger bull cycle and open $66.30, 13 May high. The bear trigger is at $57.78.
• Fires in Alberta have threatened oil production resulting in around 350kbd or 7% of Canadian output being shut down, according to Bloomberg. The closures impact heavy crude which is currently in short supply due to seasonal maintenance. PM Carney also said there’s “real potential” for a new oil pipeline, which would facilitate export to the non-US.
• While negotiations between the US and Iran are ongoing, there are reports that Iran will reject America’s proposal. Meanwhile, President Trump has said that Iran won’t be allowed to enrich uranium.
• A near-term easing of sanctions on either Iran or Russia currently looks highly unlikely but any tightening or expanding of them to include countries that buy their fossil fuels will be monitored closely. 

• Hong Kong to Sell HK$64.087 Bn 91-Day Bills
• Hong Kong to Sell HK$13 Bn 182-Day Bills
• Hong Kong to Sell HK$3 Bn 364-Day Bills
• Bank Indonesia to Sell 95D SVBI Bills
• Bank Indonesia to Sell 365D SVBI Bills
• Bank Indonesia to Sell 32D SVBI Bills
• Bank Indonesia to Sell 183D SVBI Bills
• Bank Indonesia to Sell 273D SVBI Bills
• MAS to Sell S$22.5 Bn 84-Day Bills on June 3
• MAS to Sell S$15.6 Bn 28-Day Bills on June 3
• Philippines To Sell PHP 30.0Bln 2030 Bonds (PH0000057218*)
• Indonesia To Sell 364D Bills (SPN12260604)
• Indonesia To Sell 90D Bills (SPN03250903)
• Indonesia To Sell 2040 Bonds (FR0106)
• Indonesia To Sell 2045 Bonds (FR0107)
• Indonesia To Sell 2030 Bonds (FR0104)
• Indonesia To Sell 2035 Bonds (FR0103)
• Indonesia To Sell 2064 Bonds (FR0105)
• Indonesia To Sell 2054 Bonds (FR0102)