NZD: NZD/USD - Fails Above 0.6000 Again, RBNZ today
The NZD had a range overnight of 0.5940 - 0.5996, Asia is trading around 0.5950. The short bonds and short USD trade finally got a reprieve thanks to a Reuters report that the Japanese finance ministry was considering shifting its issuance profile away from long-dated paper. This has seen the NZD fail once again above 0.6000, the RBNZ will dictate price action our session.
- MNI RBNZ Preview-May 2025: May 25bp Cut, Then?
- The RBNZ decision is announced today and rates are widely expected to be cut 25bp to 3.25% bringing total easing this cycle to 225bp. 23 out of 24 analysts surveyed by Bloomberg are forecasting this outcome.
- Given heightened uncertainty, the MPC is likely to retain its easing bias again stating it has “scope” to cut rates further if required and its updated OCR path will be scrutinised to this end. A downward revision bringing the terminal to below 3%, estimated 'neutral', would signal a need for accommodation.
- The attention will be on the medium-term which is likely to show a softer outlook driven by weaker trading-partner growth due to recent global uncertainty. The RBNZ said in April that “on balance, these developments create downward risks to the outlook for economic activity and inflation in New Zealand”.
- The NZD continues to trade in a 0.5850/0.6050 range, another failure above 0.6000 and with corporate month-end in play expect more demand for USD’s over the next day or 2.
- The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. A break above 0.6050 is needed to provide the spark for the next leg higher.
- CFTC Data showed Asset managers maintaining their shorts, while the leveraged community added a decent clip back to their own short.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5725(NZD1.09b). Upcoming Close Strikes : 0.5975(NZD400m May 29)
Data/Event : RBNZ
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
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AUD: Weaker US Equity Futures Weigh On AUDUSD In Early Monday Trading
AUDUSD was unable to hold breaks above 64c on Friday and finished down 0.2% to 0.6397 after a trough of 0.6375. All G10 currencies were lower against the US dollar (BBDXY +0.2%) with Aussie one of the better performers helped by positive risk appetite. AUDUSD tried again today to breach 64c reaching 0.6407 but is now at 0.6396, as US equity futures fall.
- The bullish theme in AUDUSD remains intact with the break of key resistance at 0.6409 reinforcing this. Initial resistance is at 0.6439, while support is at 0.6344.
- The yen underperformed in the better risk environment leaving AUDJPY 0.6% higher at 91.92. It is around this level in today’s trading. Kiwi also struggled in this environment with AUDNZD up 0.4% to 1.0730 reaching 1.0736, its highest since Monday.
- The euro and pound performed in line with the AUD. AUDEUR reached 0.5664 in Friday’s APAC trading but then trended down to 0.5613. It finished slightly higher at 0.5630 and is currently around 0.5635. AUDGBP was little changed at 0.4806.
- Equities rallied with the S&P up 0.7% and Euro stoxx +0.8% but the S&P e-mini has started the week lower (-0.2%). Oil prices rose with WTI +0.6% to $63.17/bbl. Copper fell 0.2% and iron ore is lower at around $98/t.
- There are no data or events in Australia today. The focus this week will be on Q1 CPI on Wednesday.
ASIA: Government Bond Issuance Today.
- Bank of Korea to Sell KRW500bn 91-Day Bonds
- South Korea to Sell KRW1.8tn 2-Year Bonds
- Philippines To Sell PHP 8.0Bln 91D Bills (PH0000058935)
- Philippines To Sell PHP 8.0Bln 182D Bills (PH0000059404)
- Philippines To Sell PHP 9.0Bln 364D Bills (PH0000060279)
ASIA: Coming Up in Asia Today
- Singapore Unemployment rate s.a MAR
- Hong Kong Exports YoY MAR
- Hong Kong Imports YoY MAR
- Hong Kong Trade Balance HKD MAR
- India Industrial Production YoY MAR
