BONDS: NZGBS: Closed On A Weak Note, Underperformed $-Bloc

The Asia-Pac USD/JPY range has been 144.61 - 145.04, Asia is currently trading around 144.90. USD/JPY found some demand back towards the 144.50 area when market tested lower on Hawkish comments from BOJ board member Naoki Tamura. The capitulation in oil also seems to have seen its momentum stall for now. The price action suggests any bounces will be met with sellers, corporate month-end USD demand might give them that opportunity.

• (Bloomberg) - “BoJ board member Naoki Tamura signaled a more hawkish stance on Wednesday, suggesting the Bank's 2% inflation target could be achieved earlier than expected and calling for a steady normalisation of monetary policy and the BoJ's balance sheet.”
• “A few Bank of Japan board members supported steadily reducing the Bank's JGB holdings, though concerns over moving too quickly were also raised, according to the summary of opinions from the June 16-17 policy meeting released Wednesday.”(BBG)
• An ugly daily shadow points to a potential top being in place now and highlights how quick the market is to return to selling USD’s, we are testing the support this morning around 144.50 where some demand was seen overnight.
• Price now back in its wider 142.00 - 148.00 range, I am not sure that the brief spike higher would have seen positioning altered too much so the long JPY trade remains alive and well.
• Options : Close significant option expiries for NY cut, based on DTCC data: 144.50($1.88b).Upcoming Close Strikes : 142.00($1.32b June 26), 143.00($1.41b June 26)

Fig 1 : USD/JPY Spot Hourly Chart

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

After falling 1.3% on Tuesday, gold rose to a high of $3335.24/oz today as markets stabilised following an easing in tensions in the Middle East which reduced safe-haven flows. They are now monitoring how well Israel and Iran are sticking to the ceasefire. It has been quiet on this front so far today. Bullion has come off its intraday high to be up 0.1% to $3327.2. The USD and US yields are slightly higher from early in the session. 

• Gold’s bullish theme is intact and this week’s decline is seen as corrective. Moving average studies are also still in a bull mode signalling a dominant uptrend. The yellow metal will monitor US data closely for signs of negative economic impacts from import duties and any change in the Fed’s “on hold” tone. Initial resistance is at $3451.3, 16 June high, while support is at $3286.2, 50-day EMA.
• Silver has range traded reaching a high of $35.99 and then a low of $35.90. It is currently moderately higher at $35.93. Initial support is at $35.55 and resistance at $37.32. Any sell off is still seen as corrective.
• Equities are mixed with the S&P e-mini flat, Topix down 0.2% but Hang Seng up 0.8%. Oil prices are higher with WTI +1.4% to $65.28/bbl. Copper is 0.4% higher.
• Later Fed Chair Powell continues his testimonies. The Fed’s Goolsbee, ECB’s Donnery and BoE’s Lombardelli speak. US May new home sales/permits print.

The AUD/USD has had a range of 0.6489 - 0.6508 in the Asia- Pac session, it is currently trading around 0.6500, +0.15%. The AUD attempted to move lower on the CPI print but found bids sub 0.6500 and clawed back all its losses. A quiet session sees AUD/USD continue to trade with an underlying bid tone. We are approaching the corporate month-end and this normally results in a demand for USD's so perhaps better levels could be seen for AUD buyers.

• AUSTRALIA DATA: Trimmed Mean Inflation Lowest Since 2021 Raising Cut Hopes. May headline CPI inflation was flat on the month, seasonally adjusted, driving a 0.3pp moderation in the annual rate to 2.1% driven by a broad-based easing across major components. The trimmed mean moderated to 2.4% y/y from 2.8%, the lowest since November 2021. The RBA decision is on July 8 and this data is likely to increase expectations of another rate cut but the Board prefers the quarterly CPI (due July 30) and updated staff forecasts are not provided until August.
• The AUD/USD bounced hard off its support and is now back to potentially testing the top end of its range as the USD comes back under pressure.
• We are approaching the corporate month-end and this normally results in a demand for USD’s so perhaps better levels could be seen over the course of the next day or so for those wanting to express a long AUD position.
• Price remains in the wider 0.6350 - 0.6550 range for now. The AUD needs a sustained break above 0.6550 to potentially start building towards a move higher.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6500(AUD2.11b June 26), 0.6425(AUD776m June 30).
• AUD/JPY - Today's range 93.98 - 94.28, it is trading currently around 94.20. Choppy price action as the pair establishes a range between 92.00 - 96.00. Should risk build on this move, focus could turn back to the 96.00 area.

Fig 1: AUD/USD spot Daily Chart

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