BONDS: NZGBS: Closed On A Weak Note, Underperforms $-Bloc, Q2 CPI On Monday

The NZD/USD had a range of 0.6010 - 0.6034 in the Asia-Pac session, going into the London open trading around 0.6025. The NZD has drifted higher in a quiet Asian session, still holding above 0.6000.

• NZ Data -  Westpac Consumer Confidence Signals Spending Outlook Remains Soft. Westpac Q2 consumer confidence picked up to 91.2 from 89.2 in Q1, while the number of pessimists declined they continue to outnumber optimists with the breakeven-index 100. Sentiment also remains below Q4 2024’s 97.5. Households remain cautious about the outlook despite 225bp of RBNZ easing given heightened global uncertainty, an unbalanced recovery and a soft labour market.
• "NZ TREASURY CONFIDENT OF 2025 GROWTH DESPITE WEAK MAY DATA" - BBG
• The USD is finally looking like it could potentially bounce as the risk backdrop deteriorates. We have seen this before, is this time different ?
• The NZD is back to testing its support around the 0.6000 area, a break back below here and we could see a deeper pullback. 
• While the support around 0.5850 holds in NZD/USD there should be buyers around on dips. A clear sustained break above 0.6050/0.6100 is needed for the pair to push higher.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5760(NZD1.16b). Upcoming Close Strikes : 0.5830(NZD300m June 23), 0.5755(NZD300m June20)

• AUD/NZD range for the session has been 1.0758 - 1.0776, currently trading 1.0770. A top looks in place now just above 1.0900, the cross topped out last week towards the 1.0800/25 sell area, but the momentum lower seems to have stalled for now, with the range for June basically being captured within a 1.0750 - 1.0800 range.

  Fig 1: NZD/USD Spot Hourly Chart

  

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

The AUD/USD has had a range of 0.6469 - 0.6494 in the Asia- Pac session, it is currently trading around 0.6490. The AUD has drifted higher in a quiet Asian session +0.26%.

• AU Data - Westpac Lead Index Signals Slower Growth. The Westpac lead indicator fell 0.06% m/m in May after -0.01% but this resulted in the 6-month annualised rate falling to -0.08%, the weakest since September but importantly signalling that growth could ease to below trend over the second half of the year.
• (Bloomberg) -- “China is willing to enhance the level of trade and investment facilitation with Australia, Chinese Commerce Minister Wang Wentao says. China is willing to work with Australia to adhere to cooperation and openness, and not to engage in closed-door confrontation, Wang says.”
• The AUD failed miserably again to break above the 0.6550 area, with momentum stalling and the USD starting to bounce the probability of it moving to the bottom end of its range increases.
• Price remains in the 0.6350 - 0.6550 range for now, a sustained break above 0.6550/0.6600 is needed for the move higher to accelerate.
• Buyers should continue to be around on dips while the support in the AUD/USD holds, a close back below 0.6350 is needed to challenge the newly formed uptrend.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD321m). Upcoming Close Strikes : 0.6600(AUD 1.1b June 19)

• AUD/JPY - Today's range 94.02 - 94.30, it is trading currently around 94.15.Choppy price action as the pair establishes a range between 92.00 - 96.00. A break back below 91.50/92.00 is needed to see the move lower regain momentum and the focus turn back to the year's lows again.

  Fig 1: AUD/USD spot Daily Chart

  

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

The TYU5 range has been 110-23+ to 110.30 during the Asia-Pacific session. It last changed hands at 110-25, down 0-02 from the previous close.

• The US 2-year yield is unchanged; it is trading around 3.95%.
• The US 10-year yield edged higher, it is trading around 4.40%, up 0.01 from its close.
• MNI FED: FOMC Meeting Expectations: Patience Mostly Seen In New Projections. We expect that the June meeting communications will reflect an increasingly patient attitude since May and certainly since March’s projections
• (Bloomberg) -- “The report on possible easing of the US bank capital rule has so far seen muted market reaction in part because it falls short of expectations, according to National Australia Bank. “A general reduction in capital requirements is a lesser deal than a Treasury exemption,” says Ken Crompton, head of rates strategy at the Australian bank. The general lowering of the ratio is still theoretically supportive for Treasuries’ demand, but not as much as an exemption would be, says Crompton.”
• The 10-year yield bounced strongly off its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction. Lots for the market to digest as things heat up in the middle east and we approach the FOMC.
• Data/Events: MBA Mortgage Applications, Housing starts, Initial Jobless Claims, FOMC