NZD: NZDUSD - Probing First Support Around 0.5900 As USD Bounces

AUDUSD reached a high of 0.6085 early in the US session. The pair had spent most of Tuesday trading above 60c but after reaching its peak it trended lower to a trough of 0.5947 to be down 0.4% on the day underperforming the rest of the G10. The down move was driven by the US stating it would go ahead with the additional 34% tariff on imports from China. The resultant risk reversal has seen AUDUSD fall another 0.1% to 0.5956 in early Wednesday trading after dropping to 0.5941. The USD index was 0.2% lower.

• The downtrend begun in late September has resumed with the recent sell off in AUDUSD. The pair approached initial support at 0.5931 in early trading today. Initial resistance is at 0.6127.
• Risk-averse CHF and JPY outperformed yesterday. As a result AUDJPY fell 1.5% to 87.14 and has started today lower again at 86.92.
• Kiwi is also risk-sensitive but Aussie still underperformed leaving AUDNZD down 0.4% to 1.0766 after a low of 1.0741. It is currently slightly higher at 1.0784. The RBNZ is widely expected to cut rates 25bp today.
• AUDEUR rose to 0.5428 before the pullback in risk. It then fell to 0.5428 and finished down 0.9% to 0.5437. It is lower again today at 0.5426. AUDGBP is down 0.8% to 0.4667 and has started the session 0.2% lower again at 0.4660.
• Equities were mixed with the S&P down 1.6% but Euro stoxx up 2.5%. Oil prices fell sharply with WTI down 4.1% to $58.23/bbl. Copper is 1.7% lower and iron ore is down to $96-97/t.
• There are no data or events in Australia today. 

• The overnight range was 145.97 - 147.67, Asia opened close to the lows around 146.15.
• CNH/JPY is looking to break some pivotal support around 19.50/20.00.
• Should the PBOC let the CNH weaken to compensate for the tariffs, this move would accelerate and drag cross-JPY lower with it.
• President Trump is said to have spent the final hours before his tariffs were set to be implemented, lining up negotiations with key US allies.
• The Market is hoping for a sign of any of these actually being done and the details thereof in order to bring some much needed relief.
• The environment for the BOJ seems to be more challenging and due to their conservative approach there is now a risk that it will delay policy normalisation. 
• USD/JPY has seen its bounce back to 148.00 falter and has drifted lower as risk has closed poorly the market showing its disappointment at no deal being made yet.
• The fact that USD/JPY has not followed the move higher in US fields shows the market is more concerned with risk aversion and the potential move lower in JPY crosses.
• On the day expect sellers again back towards 147/148 with all eyes on CNH/JPY.
• Key pivotal support lies around 140.00, a break of this area would really set the cat amongst the pigeons and open a quick move back to the 1.25/1.30 area.
• Data : March Consumer Confidence Index, est. 34.8, prior 35.0, March Machine Tool Orders YoY, prior 3.5%.

USDJPY

Source: MNI - Market News/Bloomberg

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