NZD: NZD/USD - Finds Sellers Around 0.5950
The NZD/USD had a range overnight of 0.5923 - 0.5960, Asia is trading around 0.5925. US stocks are back at their highs even after record revisions to the payrolls data, nothing stops this train. The NZD has bounced into what should be the perfect zone to fade for bears, the price action for the USD though gives me pause. CFTC Data shows light positioning in a market that is struggling for a strong trend as we move back into the middle of the recent 0.5800-0.6100 range. US Futures have opened slightly higher this morning, E-minis +0.20%, NQU5 +0.10%.
- MNI: RBNZ Leadership Woes Present Reform Opportunity. Suzanne Snively, a former board member and chair of the independent experts panel that led the 2017–22 RBNZ Act review, said the government may revisit the balance between RBNZ independence and ministerial control, with Finance Minister Nicola Willis likely to reopen debate over governance structures that were examined in the 2017–22 Act review
- MNI INTERVIEW: China To Advocate For SCO Free Trade Zone. China will continue pressing for a free trade area within the Shanghai Cooperation Organisation (SCO), despite last week’s leaders’ declaration in Tianjin omitting the initiative, a senior Chinese official told MNI.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5800(NZD515m), 0.5870(NZD320m). Upcoming Close Strikes : none - BBG
- CFTC Data of last week shows Asset Managers added slightly to their new short position in the NZD -5127(Last -4743), the Leveraged community have completely exited their short and have turned a fraction long +285(Last -225).
Data/Event: Net Migration, RBNZ Chief Economist Conway speaks to the Auckland Chamber of Commerce, RBNZ Manager Balance Sheet Policy Craigie will speak on the Liquidity Management Review at 1330
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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US TSYS: Yields Ended Higher, Led By The Front-End
TYU5 reopens at 111-26, down 0.00+ from closing levels in today’s Asia-Pac session.
- Overnight the US 10-year yield had a range of 4.2423% - 4.2868%, closing around 4.283%.
- Treasury yields ended higher on Friday night; led by the front-end (2s10s +0.24 at 51.849, 5s30s -1.65 at 101.640).
- MNI FED: St Louis's Musalem Says Labor Market "Looks Good". St Louis Fed Pres Musalem (2025 FOMC voter, hawk) says in a Q&A that he supported the July decision to hold rates as the FOMC is missing on its inflation target but not its employment target. He says that looking forward, they may miss on both sides of the mandate - but doesn't sound too concerned about the labor market (noteworthy given the weak July payrolls report) albeit he sees risks to the downside. And he eyes potential upside tariff-related risks to inflation.
- MNI DATA - Tuesday’s CPI report headlines the US economic calendar with analysts expecting core CPI inflation to gain momentum in July as the acceleration in core goods inflation continues. We’re starting to get into larger tariff impacts on core goods but the largest could be reserved for Aug-Sep by some estimates. We are currently tracking unrounded core CPI estimates at around 0.32% M/M after the 0.23% in June at what would be the strongest M/M print since January.
- The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now, looking to initially test the 4.10% area.
Fig 1: 10-Year US Yield 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Coming Up In Asia-Pac Markets On Monday
| 0100BST | 0800HKT | 1000AEST | South Korea Trade 10 Days Aug |
| 0300BST | 1000HKT | 1200AEST | South Korea Sell KRW 4.4 tln 3-yr Bonds |
AUD: AUD/USD - Consolidates Above 0.6500, Eyes RBA Tomorrow
The AUD/USD had a range Friday night of 0.6514-0.6535, Asia is trading around 0.6520. US equities pushed higher once more on Friday night. Depending on what your view is 0.6550 still offers good risk/reward to fade initially. I feel the performance of US equities over August/September will be crucial as seasonality points to some strong headwinds approaching.
- MNI - The RBA decision is on Tuesday August 12 and is widely expected to cut rates 25bp to 3.60% given the further moderation in underlying inflation in Q2 and signs that the labour market has reached a turning point and is weakening. It had 50bp of easing for H2 assumed in its May projections. There will be an update to the RBA outlook provided with the decision but it is likely to be consistent with the Board's cautious approach to easing.
- “Carry traders are piling into high-yielding EM currencies as wagers on Fed rate cuts weaken the dollar.” - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6565(AUD783m Aug 12), 0.6600(AUD1.25b Aug 14) - BBG
- CFTC Data shows Asset managers added to their shorts -60729(Last -49183), the Leveraged community added very slightly to their own shorts -13997(Last -13823).
- Data/Event: Foreign Reserves
Fig 1: AUD CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
