NZD: NZD/USD - Correction Extends Above 0.5700-0.5710, First Target 0.5760
The NZD/USD had a range today of 0.5693 - 0.5732 in the Asia-Pac session, going into the London open trading around 0.5730/35, +0.55%. The NZD/USD extended its surge higher moving above the 0.5710 resistance with better NZ data and Hawkesby saying the hurdle is high for more cuts. Positioning still looks to be an issue in the short term. While the risk backdrop remains so constructive this will provide further headwinds for the NZD shorts and I suspect we see more of the weaker hands pressured. On the day dips back toward 0.5680/0.5700 will likely be supported, if this break above 0.5710 is sustained the market will be looking toward 0.5760 first then the more important 0.5800-50 resistance.
- MNI AU - Strong Retail Spending Consistent With RBNZ Pause: Q3 retail sales volumes were significantly stronger than expected and rose for the fourth consecutive quarter. They were up 1.9% q/q to 4.5% y/y, the fastest pace since Q4 2021 and consistent with the RBNZ on hold for now as signalled by its revised November OCR path. Governor Hawkesby said in the decision press conference that there were signs easing was supporting consumption and this data is in line with that sentiment.
- MNI AU - Business Survey Signals Stronger H2 Growth & Lower Q4 Inflation. The ANZ November business survey is consistent with RBNZ’s Hawkesby’s comment following Wednesday’s rate cut that the recovery “is happening right now through Q3 and Q4”. It is a piece of high frequency data consistent with rates staying at 2.25% for now. Businesses are their most positive since 2014. Activity compared to a year ago, a good indicator for GDP, rose to 21.3 from 4.6 with ANZ saying that only construction remains negative. Thus it appears that growth recovered further in Q4.
- “RBNZ’S HAWKESBY SAYS HURDLE IS HIGH FOR ANY FURTHER RATE CUTS, CANNOT KEEP DOOR OPEN TO EASING FOREVER" - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5700(NZD356m Dec 2), 0.5940(NZD427m Dec 1) - BBG
- The NZD/USD Average True Range for the last 10 Trading days: 47 Points
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AUSSIE BONDS: Front End Yields Up, Nov RBA Easing Risks Pared, Q3 CPI Tomorrow
Aussie 3yr (YM) bond futures underperformed, last 96.545, off 3.5bps. 10yr futures were up a touch to 95.815. The bias in US Tsy futures has been to nudge higher, support the Aussie 10yr but the 3yr is likely reflecting near term uncertainties around the RBA outlook, with tomorrow's Q3 CPI print in focus. ACGB yields are mixed, as the curve flattens, the front end 3yr establishing itself back above 3.40% (last 3.44%), while the 10yr has drifted lower to 4.165%. This leaves the 3/10s curve at +72bps, flatter by 5bps.
- The AU-US 10yr spread is near +19bps, so back towards the upper ends of its recent range. We see spread compression trades re-emerge above +30bps, but a lot depends on tomorrow's Australian Q3 CPI print.
- Key watch points for CPI tomorrow are as follows: Bloomberg consensus expects trimmed mean to print at 0.8% q/q & 2.7% y/y, which would see a pickup in the 2q/2q annualised rate to 2.8% from 2.6%. This outcome could argue for a hold or a cut dependent on the revised outlook and services inflation result. This week Bullock reiterated that labour data are volatile and while the 0.2pp rise in the September unemployment rate to 4.5% was surprising, it could fall again in October. Thus she would like more information.
- Market pricing has around 10bps of easing priced in for Nov, we were around 16bps at the end of last week. A full cut is priced by the Feb meeting next year.
GOLD: Gold Range Trading Ahead Of October Fed Decision
Gold range traded during today’s APAC session with breaks above $4000 continuing to be temporary. Prices have just dipped and are down 0.3% to $3970.0 after a high of $4019.68 and intraday low at $3964.01. It found some support from the weaker US dollar (BBDXY -0.2%) while US yields are steady. There was little news to drive safe-haven flows in either direction ahead of Wednesday’s Fed decision.
- Gold has held above support at $3944.9, 9 October low, but remains well below initial resistance at $4186.4, 17 October low. Bullion continues to be in overbought territory despite the recent correction.
- Central bank buying, especially from the PBoC, has provided medium-term support to gold prices and this is generally expected to continue. In line with this, the Bank of Korea said today that it is considering extra purchases for its reserves over the medium- to long-term which would be the first time in 10 years.
- Silver is down 0.3% to $46.68 and has also been in a narrow range between $46.620 and $47.227, below initial support at $47.55, 22 October low. The trend also remains overbought and the current decline is seen as corrective.
- Equities are mixed with the S&P e-mini flat, KOSPI down 1.2% but CSI 300 up 0.2%. Oil prices are lower with WTI -0.2% to $61.16/bbl. Copper is down 0.6%.
- Later August US S&P Cotality & FHFA house prices, October Richmond & Dallas Fed indices and October Conference Board consumer confidence as well as German November GfK consumer confidence and ECB bank lending survey are released.
US TSYS: Quiet Day as Curves Modestly Flatter
Despite weakness across major equity bourses, US bond futures didn't see a lead in with TYZ5 posting only modest gains. Up +02 at 113-15+ the the 10-Yr price action was muted as volumes remained modest throughout the trading day.
Cash volumes were light also, capping yield moves.
- The US 2-Yr is 3.499% (+0.4bp)
- The US 5-Yr is 3.607% (+0.3bp)
- The US 10-Yr is 3.979% (-0.4bps) as it consolidates below the 4.00% recent range bottom.
- The US 30-Yr is 4.551% (-0.3bp)
Focus for markets tonight will be US$69bn 2-Yr auction, US$70bn 5-Yr auction and various bill auctions.
Economic Data focus is on :
10/28/2025 9:00 FHFA House Price Index MoM (-0.1%, -0.1%)
10/28/2025 9:00 S&P Cotality CS 20-City MoM (-0.07%, -0.10%), YoY (1.82%, 1.40%)
10/28/2025 10:00 Richmond Fed Mfg Index (-17, -10)
10/28/2025 10:00 Conf. Board Consumer Confidence (94.2, 93.4)
10/28/2025 10:30 Dallas Fed Services Activity (-5.6, --)
