BONDS: NZGB Yields Down But Away From Worst Levels, US Tsy Yields Edge Higher
NZGB yields sit lower, but are away from session lows. We are around 4-5.5bps lower across the benchmarks, with the 15-30yr tenors slightly lagging the other tenors. The 2yr yield is under 3.19%, while the 10yr is back to 4.45%. The 2yr is threatening multi month lows, while the 10yr is around mid range.
- The pick up in US Tsy yields (around +2-3bps across the curve), has helped pull NZGB yields up from session lows.
- In the swap space, the 2yr is holding under 3.00%, off 5bps so far today. The 10yr couldn't sustain an earlier move under 3.90%, last close to 3.92%, off around 4bps.
- The local news flow has been very light with no data out today. Market focus has been on spill over from the Tsy yield plunge on Friday. So far today risk appetite has held up ok, which has likely aided some yield retracement.
- The main data event this week will be Wednesday's Q2 labour market report. It is likely to show a contraction in employment and a further pickup in the unemployment rate and as a result further moderation in wage inflation. Q2 filled jobs fell 0.3% q/q after -0.1% signalling that there was job shedding in the quarter. The unemployment rate was stable in Q1 at 5.1%, helped by a 0.1pp fall in the participation rate, but this was up almost 2pp since the Q1 2022 trough. The economic recovery remains lacklustre despite 225bp of easing and thus given the lags the labour market is yet to pickup again.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Trend Outlook Remains Bearish
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.3674/3776 20- and 50-day EMA values
- PRICE: 1.3607 @ 16:12 BST Jul 4
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
The trend needle in USDCAD points south and this week’s move down reinforces current conditions. S/T gains between Jun 16 - 23 appear to have been corrective. Key support and the bear trigger is 1.3540, Jun 16 low. Clearance of this level would resume the downtrend and open 1.3503, a Fibonacci projection. Pivot resistance is at the 50-day EMA, at 1.3776. A clear break of this average would signal scope for a stronger recovery.
AUDUSD TECHS: Bull Cycle Remains In Play
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01
- PRICE: 0.6548 @ 16:05 BST Jul 04
- SUP 1: 0.6521 20-day EMA
- SUP 2: 0.6468/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and the pair is holding on to its recent gains. The latest break higher maintains the bullish price sequence of higher highs and higher lows, the definition of an uptrend. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 0.6603 next, the Nov 11 2024 high. Key short-term support has been defined at 0.6373, the Jun 23 low.
EURJPY TECHS: Northbound
- RES 4: 171.88 High Jul 19 ‘24
- RES 3: 171.28 1.382 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 2: 171.09 High Jul 23 ‘24
- RES 1: 170.61 High Jul 03
- PRICE: 170.22 @ 16:04 BST Jul 04
- SUP 1: 169.04 Low Jul 02
- SUP 2: 167.87 20-day EMA
- SUP 3: 167.13 Low Jun 20
- SUP 4: 165.66 50-day EMA
EURJPY traded higher on Thursday resulting in a print above 170.47, the 76.4% retracement of the Jul 11 - Aug 5 sell-off. A clear break of this price point would strengthen bullish conditions and signal scope for extension. This would open 170.28 next, a Fibonacci projection. The trend is overbought, a pullback would unwind this condition. Support to watch lies at 167.87, the 20-day EMA.
