BONDS: NZGBS: Cheaper, Mid-Range, NZ Outperforms $-Bloc STIR Over The Week

• RES 4: 1.1276 High Jul 18 ‘23 
• RES 3: 1.1214 High Sep 25 2024 and a key resistance 
• RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing  
• RES 1: 1.1144 High Oct 1 2024 / High Apr 3 and the bull trigger     
• PRICE: 1.1052 @ 05:47 BST Apr 9
• SUP 1: 1.0882 Low Apr 7     
• SUP 2: 1.0844 20-day EMA     
• SUP 3: 1.0733 Low Mar 27 and a key short-term support     
• SUP 4: 1.0713 50-day EMA and a short-term pivot level

The trend condition in EURUSD is bullish and the latest pullback is considered corrective. Key resistance at 1.0955, Mar 18 high, was breached last week, confirming a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. Sights are on 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0844, the 20-day EMA. 

The US’ reciprocal tariffs have gone into effect including 104% on imports from China. In response, most assets have sold off with US bond yields higher, the USD weaker and equity & commodity prices lower. Markets are very concerned that a trade war will cause not just a recession in the US but globally. Negotiations to reduce some of these duty rates are expected but talks for most seem yet to begin. Japan is likely to be one of the first to announce if there was any success.

• Equities are significantly weaker except in China. S&P e-mini is down 2.6%, Euro stoxx futures -4.3%, Hang Seng -1.6%, Nikkei -5.0% and ASX -2.1%. The CSI 300 is up 0.3%.
• The BBDXY USD index is down 0.5% to fall below Tuesday’s lows. Flight-to-quality flows continue to benefit the yen and Swiss France with USDJPY down 1.0% to 144.87 and USDCHF -0.9% to 0.8403. EURUSD is also higher at +0.9% to 1.1055 and GBPUSD +0.6% to 1.2846. Aussie and kiwi are lagging given their sensitivity to a pullback in risk with AUDUSD +0.1% to 0.5963 and NZDUSD flat at 0.5535. The RBNZ cut rates 25bp as expected.
• Cash US Treasuries have continued yesterday’s sell off driven by the possibility that China retaliates for the additional 50% tariff. Nothing has been announced yet. 10yr JGB and ACGB yields are also materially higher.
• Commodity markets are afraid that increased protectionism will reduce demand. WTI crude is down another 4.3% to $57.02 after 4% yesterday. Copper is 0.6% lower and iron ore is round $96/t. Safe haven gold is up 0.9% to $3009/oz after finishing flat on Tuesday.
• Later the Fed’s Barkin speaks and March FOMC meeting minutes are published. The ECB’s Cipollone participates in a panel and BoE’s FPC meeting record is released.

• RES 4: 132.80 High Feb 5               
• RES 3: 132.56 High Feb 28 and a key resistance        
• RES 2: 132.03 High Apr 7 and the bull trigger 
• RES 1: 130.57 50.0% retracement of Monday’s high-low range                     
• PRICE: 130.14 @ 05:26 BST Apr 9
• SUP 1: 129.22 20-day EMA        
• SUP 2: 128.47 Low Mar 28            
• SUP 3: 127.74 Low Mar 25 and a key short-term support 
• SUP 4: 127.20 Low Mar 17   

Bund futures traded in a volatile manner Monday and remain below their recent highs. A bull cycle remains in play and a pullback is considered corrective. A fresh short-term cycle high Monday signals scope for a continuation of the uptrend. The contract has cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support lies at 129.22, the 20-day EMA.