NZD: NZD/USD - Consolidates Around 0.6100, Eye's NFP On Thursday

The AUD had a range Friday night of 0.6408 - 0.6448, Asia is opening around 0.6440. Friday moves were dictated by what looked to be a potential breakdown in US-China relations along with month-end covering which saw US stocks move lower and also supported the Bond market.

• Bloomberg - “ Donald Trump’s decision to double steel tariffs on imports was “inappropriate” but it won’t impact Australia any more than it would other countries. Prime Minister Anthony Albanese said the US President’s move to increase tariffs on steel and aluminum to 50% from 25% was “an act of economic self harm by the United states that will increase the cost for consumers in the US.”
• “Australian home prices rose for the fourth consecutive month, driven by interest rate cuts and expectations of further cuts later this year.”(BBG)
• The AUD continues to hold up pretty well against the USD so If you want to express a short it looks best to do that in the crosses for now.
• Expect buyers to continue to be around on dips while the support in the AUD holds, a close back below 0.6300/50 would start to challenge the newly formed uptrend. A break above 0.6550 and the move higher could begin to accelerate.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD586m), 0.6425(AUD454m), 0.6575(AUD445m). Upcoming Close Strikes : 0.6490(AUD 787m June 5)
• CFTC Data shows Asset managers pared back their shorts ever so slightly, the Leveraged community though added to their shorts quite aggressively over the week.

• Data/Event: S&P Global Australia PMI, Melbourne Institute Inflation, ANZ - Job Ads

  Fig 1: AUD CFTC Data

  

  Source: MNI - Market News/Bloomberg

   

TYU5 reopens at 110-27, up 0-03 from closing levels in today’s Asia-Pac session.

• Friday night US 10-year yields had a range of 4.3846% - 4.4378%, closing around 4.40%. 
• Treasury yields ended generally lower overnight, the front-end led the move causing the yield curve to steepen (2s10s +1.93 at 49.669, 5s30s +4.91 at 96.536).
• Chicago Business Barometer™ - Slowed To 40.5 In May: The Chicago Business Barometer™, produced with MNI, slowed 4.1 points to 40.5 in May. This was the second consecutive fall, bringing the index to its lowest level since January. The index has now been below 50 for eighteen consecutive months.
• US DATA: Rare Supercore PCE Deflation But Robust Market-Based Metrics: Core PCE inflation was completely in line with expectations for April on a M/M basis, at 0.116% M/M (unrounded analyst average 0.12).
• This marginal sequential firming in core PCE (from 0.09% to 0.12%) came despite a particularly weak core services ex-housing (supercore) at -0.02% M/M in Apr after 0.15% M/M. Supercore last saw M/M deflation in Mar and Apr 2020.
• The 10-year has come back down to test its support around 4.35/40%, likely aided by month-end rebalancing.  Yields need to hold above this area to continue to build for a move higher. 

2300GMT 0700HKT 0900AEDT Australia S&P Global PMI Mfg May F
2350GMT 0750HKT 0950AEDT Japan Capital Spending Q1
2350GMT 0750HKT 0950AEDT Japan Company Sales/Profits Q1
0030GMT 0830HKT 1030AEDT Japan Jibun Bank PMI Mfg May F
0100GMT 0900HKT 1100AEDT Australia MI Inflation Gauge May
0130GMT 0930HKT 1130AEDT Australia ANZ-Indeed Job Ads May
0200GMT 1000HKT 1200AEDT South Korea Sell KRW2.3tln 2-Yr Bonds