NZD: NZD/USD Trades Soft Overnight, Finds Support Around 0.5900
The NZD had a range overnight of 0.5894 - 0.5938, Asia is trading around 0.5900. The NZD traded under pressure for most of the London session as the USD finally found some support. It found bids and held up around the 0.5900 area in the N/Y session even as Stocks closed poorly.
- Bloomberg - “New Zealand’s forecasts for its budget deficits to end with a shift to a whisker thin surplus in 2028-29 rest on excessively optimistic growth assumptions. Weakness in the economy is already damaging the fiscal position, with lower revenue and higher expenditure leading to wider near-term shortfalls. The narrowing in the deficit will fall short of the government’s projections — prompting further fiscal consolidation later this year and in next year’s budget update.”
- The NZD continues to look comfortable in a 0.5850/0.6050 range and awaits a catalyst to provide the impetus to break-out.
- The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. The first target is the highs just above 0.6000, a break here is needed to regain momentum.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5705(NZD805m May 23), Upcoming Strikes : 0.5980(NZD513m May 26), 0.5725(NZD1.09b May 28)
Data/Event : NZ Retail Sales
Fig 1: NZD/USD Spot Daily Chart
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AUSSIE 10-YEAR TECHS: (M5) Remains Toward Top End of Recent Range
- 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 @ 16:08 GMT Apr 22
- SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.640 - 1.0% 10-dma envelope
Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
US TSYS: Yields Unwind Some Of Monday Moves
TYM5 reopens at 110-22, down -0-03 from closing levels in today’s Asia-Pac session.
- Overnight US 10-year yields had a range of 4.3695% - 4.4341%, closing around 4.40%.
- Treasury yields finished mixed Tuesday, curves unwinding a large portion of Monday's steepening with bonds outperforming the short end(2s10s - 6.24 at 57.965).
- (Bloomberg) -- “Treasury’s $69 billion auction of two-year notes was awarded at 3.795%, lowest result since September, vs 3.789% when-issued yield at the bidding deadline of 1 p.m. New York time, despite cheapening by about 5bp into the sale.”
- Treasury Secretary Bessent Tuesday privately told investors the tariff standoff is unsustainable and he expects de-escalation with China.
- 10-year Yields, having bounced off their support around the 4.25 area, are consolidating and the range looks to be 4.25/4.50% for now.
CROSS ASSET: USD/JPY Bid Post Trump Remarks On No Intention To Fire Powell
FX markets are reacting early to Trump remarks made in the oval office a short while ago.
- USD/JPY is up around 0.60%, last near 142.40/45, while EUR/USD is down around 0.40%, last close to 1.1375. AUD/USD is the only G10 currency marginally higher versus the USD, up 0.10% to 0.6370/75. The ETF for the S&P500 is up 2% in post market trade (per BBG).
- These moves come after US President Trump stated that he had no intention of firing Fed Chair Powell (which has been a cause of concern recently and around the outlook for Fed Independence). Such fears were a further weight on broader US asset related sentiment.
- Trump also stated that the final tariff number for China wouldn't be near the current 145%. He also expressed optimism around trade deals with lots of countries and spoke of the large investment agreements reached for flows into the US.
- USD/CNH is lower, off around 0.15% to the low 7.3000 region.
