NZD: NZD/USD - Falls Back To 0.5900
The NZD/USD had a range overnight of 0.5909 - 0.5973, Asia is trading around 0.5920. US yields bounced hard in reaction to the PPI print, reigning in its expectations for larger rate cuts. This saw the USD get a reprieve and bounce off its support area. The NZD/USD has moved lower overnight in reaction to this but while still firmly in the 0.5850-0.6150 range it's tough to discern any real direction. Risk has opened a little lower this morning, E-minis -0.01%, NQU5 -0.20%.
- (Bloomberg) -- “New Zealand Finance Minister Nicola Willis said that she hopes her nation will be front of the queue for any US tariff review. She also flagged an upcoming decision on some foreigners’ ability to buy property in the South Pacific country.”
- “We understand the rule that has been applied, but it’s hard to conceive that New Zealand — a country of five million people — has any kind of threat to the manufacturing or industrial base of America,” she says.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5925(NZD400m Aug 20). - BBG
- CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
- Data/Event : BusinessNZ Man PMI, Food Prices, Net Migration
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUD: AUD/USD - Falls On US CPI, Looking To Test 0.6480 Support Area
The AUD/USD had a range overnight of 0.6508- 0.6576, Asia is trading around 0.6515. 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. This has seen currencies take a hit across the board, the AUD/USD has fallen quickly back to the lower end of its recent 0.6500/0.6600 range, its fortunes clearly tethered to the USD and if it can continue to pressure a short market then the AUD/USD could probe its support just below 0.6500. A Sustained break through this level opens up the potential for a further pullback towards the 0.6350 area.
- (Bloomberg) -- China and Australia agreed to enhance exchanges and cooperation, uphold their respective national interests and navigate differences wisely, according to a joint statement released by the Chinese foreign ministry.
- “The slowdown of China's GDP growth in the second quarter was relatively mild but the details raise concern about the outlook. Policymakers can’t let their guard down. Downside risks are high. The economy appears unable to walk without a policy crutch. Without additional support later in the year, growth could take another lurch down.” - BBG
- The AUD/USD continues to hold above its support around 0.6500, it will continue to take its cues from the USD. The price action after US CPI suggests a test of this support.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD452m), 0.6575(AUD670m). Upcoming Close Strikes : 0.6480(AUD786m July18), 0.6500(AUD639m July 21), 0.6600(AUD725m July 21)
- CFTC Data shows Asset managers added to their shorts slightly -38252, the Leveraged community pared back their shorts to -19061.
Fig 1: AUD/USD spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE 10-YEAR TECHS: (U5) Rolling Off Highs
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.545 @ 16:09 BST Jul 15
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures traded under pressure for much of last week, keeping prices pressured and within range of the recent pullback lows. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.
US TSYS: Yields Extend Higher On CPI
TYU5 reopens at 110-10, up 0-01 from closing levels in today’s Asia-Pac session.
- Overnight the US 10-year yield had a range of 4.3915% - 4.4893%, closing around 4.48%.
- Treasury yields extended higher overnight on potential tariff driven inflation fears; the yield curve reaction was mixed (2s10s +0.60 at 53.740, 5s30s -0.76 at 97.910).
- MNI US DATA: Core Services Keep June Inflation On The Cool Side. The softer-than-expected core reading in June (0.23% M/M vs 0.29% MNI median, 0.13% prior) comes with higher core goods prices than expected (0.20% M/M vs 0.19% MNI median, -0.04% prior), but that's outweighed by core services slightly on the light side (0.25% M/M vs 0.27% MNI median, 0.17% prior).
- Futures had rejected the initial post-CPI rally (TYU5 110-30 high) as markets woke up to the fact there were clear signs that tariffs are starting to show up in the core goods data. Higher than expected Empire Mfg contributed to the sell-off at the margins.
- Bloomberg - “Relatively tame inflation data failed to ease Wall Street’s worries about the impacts of tariffs, with initial rallies in stocks and bonds sputtering on bets the Federal Reserve will keep rates on hold for now.”
- The 10-year yield has broken above 4.45% in response to the CPI Data, this implies price is likely to now turn its focus back to 4.65% and could see further paring back of longs. Support is now back towards the 4.35/40% area which has been the pivot in the larger 4.10% - 4.65% range.
Fig 1: 10-Year US Yield Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
