NZD: NZD/USD - Stalls Around 0.5950, Awaits US CPI Tonight

The overnight range was 147.35 - 148.25, Asia is currently trading around 148.15. USD/JPY is probing above 148.00 as the market pares back on some USD’s shorts going into the US CPI tonight. Price is holding above the support area well between 146.00/147.00, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate.

• MNI US CPI Preview: High Early Bar To September Fed Hold. The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M. 
• Bloomberg -- “The new chief of Japan’s financial regulator has a message for regional banks: don’t rely on rising interest rates to fix your problems. Local lenders have been counting on last year’s scrapping of negative rates to help turn them around, blaming the policy for crushing profitability. But the new era of higher rates will spark fresh competition for depositors at a time when technology is transforming the industry, according to Financial Services Agency Commissioner Yutaka Ito.”
• Options : Close significant option expiries for NY cut, based on DTCC data: 147.30($878m), 146.00($597m).Upcoming Close Strikes : 147.00($1.01b Aug 13), 150.25($1.47b Aug 13) - BBG.
• CFTC data shows asset managers reduced their JPY longs +60532( Last +75119), leveraged funds slightly reduced their newly built short JPY position -29308(Last -31280).
• Data/Event : Money Stock M2/M3

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Gold fell 1.6% to $3342.37/oz on Monday as markets waited for clarification on the tariff-status of US gold imports. US President Trump posted that “Gold will not be Tariffed!”, which saw prices come off their low of $3341.40 but then trended down again. They held above initial support at $3268.2. The stronger US dollar also added to the pressure with the BBDXY +0.3%. Bullion is slightly higher on Tuesday at $3344.3.

• Gold was exempted from US tariffs in April but last week a customs ruling stated that 100oz and 1kg bars would face import duties introducing increased uncertainty into the market and risking the seamless operation of trade, according to Bloomberg. A formal statement that gold will be exempt is yet to be released.
• Tuesday’s US July CPI data will be a key event with both core and headline expected to tick up 0.1pp. The market has an 85% chance of a rate cut for the Fed’s September meeting, which would be good for bullion.
• Silver fell 1.9% to $37.614/oz close to the low of $37.554 and has started today around $37.598. It’s holding above initial support at $36.216, 31 July low. The trend remains bullish though and declines since the July peak are seen as corrective. Initial resistance is at $39.655.
• Equities were weaker with the S&P down 0.25% and Euro stoxx -0.3% but FTSE up 0.4%. The S&P e-mini has started today flat. Oil prices were slightly higher with WTI +0.2% to $64.00/bbl. Copper fell 0.6%.

The NZD/USD had a range overnight of 0.5925 - 0.5957, Asia is trading around 0.5935. US equities topped out as some risk is pared back heading into CPI tonight, similar price action was seen against the USD with the market wary of a higher print. Risk has opened a little lower this morning, E-minis -0.05%, NQU5 -0.05%. NZD/USD bounced nicely off its 0.5850 support last week but depending on your view I would suspect sellers could return on any bounce back toward 0.6000/0.6050. For the moment firmly back in the 0.5850-0.6100 range looking for a catalyst to break and give clearer direction. The US CPI tonight could potentially be an important input.

• TARIFFS: Trump Extends China Tariff Deadline By 90 Days: CNBC reports: "President Donald Trump has signed an executive order that will prevent U.S. tariffs on Chinese goods from snapping back to near-embargo levels for another 90 days, a White House official told CNBC on Monday.
• MNI US CPI Preview: High Early Bar To September Fed Hold. The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M. 
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes :  0.5825(NZD300m Aug 14). - 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).

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P