NZD: NZD/USD - Tops Out Above 0.5900
The NZD/USD had a range overnight of 0.5838 - 0.5889, Asia is trading around 0.5865. The NZD topped out above 0.5900 and moved lower with risk overnight. The NZD sellers should continue to be around looking to fade the move back towards the 0.5950 area initially. The USD finding some demand finally has helped put a top in above 0.5900 for now though NFP on Friday will have a say if that remains the case. US Futures have opened higher this morning on the google judgement, E-minis +0.30%, NQU5 +0.40%.
- “Alphabet jumped more than 6% postmarket after a judge ruled Google is not required to sell its Chrome web browser in the Justice Department’s landmark antitrust case against the search engine.” - BBG
- Milk Power Auction Price Falls, Back To Late 2024 Levels : Overnight the average price for whole milk powder fell to $3809 versus $4036 at the previous auction, per GDT . This was a 5.3% drop. The whole milk powder price is now at fresh lows for 2025. The terms of trade proxy has matched this fall recently.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5700(NZD384m). Upcoming Close Strikes : none - BBG
- CFTC Data of last week shows Asset Managers added slightly to their new short position in the NZD -4743(Last -3198), the Leveraged community have almost completely exited their short -225(Last -4004).
- Data: ANZ Commodity Price, Cotality Home Value
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUD: AUD/USD - Bounces Off 0.6400 As The USD Reacts To The Move In Yields
The AUD/USD had a range Friday night of 0.6419-0.6493, Asia is trading around 0.6465. US Yields collapsed in response to the NFP data which sparked a kneejerk response lower in the USD. This was also a very bad day for US stocks which finally look to be pulling back from elevated levels. The question for the AUD going forward is does the USD see sellers quickly return in response to the move in rates, or can the USD rise from the ashes and return as a safe haven? The AUD bounced nicely off the 0.6400 area but I suspect sellers again back towards the 0.6500/50 area initially as risk wobbles and the market wrestles about what to do with the USD.
- (Bloomberg) - “ Australia’s Victoria state intends to overhaul workplace laws to enshrine hybrid working rights, irking business groups who anticipate the move will undermine confidence.”
- “China’s July trade figures will offer insight into the resilience of its export sector as it navigates tariff headwinds and cooling global demand. We expect exports to remain solid, with port data pointing to steady growth as strength in non-US markets helps offset a decline in shipments to the US.” - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6465(AUD727m), 0.6450(AUD402m). Upcoming Close Strikes : 0.6600(AUD1.97b Aug 7), 0.6800(AUD1.72b Aug 7) - BBG
- CFTC Data shows Asset managers reduced their shorts slightly -49183(Last -53959), the Leveraged community added to their own shorts -13997(Last -12010).
- Data/Event: Melbourne Institute Inflation
Fig 1: AUD/USD spot 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- 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: 95.755 @ 17:30 BST Aug 1
- 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 subdued into Friday’s NFP print. The subsequent US 10y rally dragged Aussie 10-year futures with it, putting prices toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. 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.
US TSYS: Yields Collapse Lower, Led By The Front-End
TYU5 reopens at 112-10+, up 0-04 from closing levels in today’s Asia-Pac session.
- Friday night the US 10-year yield had a range of 4.4060% - 4.2002%, closing around 4.216%.
- Treasury yields collapsed lower overnight; led by the front-end causing the yield curve to steepen (2s10s +11.53 at 53.012, 5s30s +13.74 at 106.324).
- MNI US DATA: Huge Downward Revisions For Payrolls Set The Tone. Nonfarm payrolls growth was weaker than expected in July at 73k (cons 104k) after huge downward revisions in both June (-133k to just 14k) and May (-125k to 19k). The downward revisions came from a combination of large shifts in both private and public payrolls, equally spread over both May and June.
- MNI FED: Bowman, Waller Cite Labor Concerns In Fed Dissents. Federal Reserve governors Michelle Bowman and Christopher Waller said Friday that they voted against the central bank’s "wait and see" rate policy this week because upside risks to price stability have diminished and it was time to proactively hedge against further weakening in the economy and the risk of damage to the labor market. In separate statements, the two governors said inflation is moving closer to the central bank's 2% target and cited increased concerns about the Fed's employment mandate.
- 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. The move was even more aggressive in the 2-year which has rejected the move back towards 4% and now looks to target the pivotal 3.50% area.
Fig 1: 10-Year US Yield 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
