BONDS: NZGBS: Modest Bear-Flattener, Underperform $-Bloc Peers

The BBDXY has had a range today of 1206.22 - 1207.31 in the Asia-Pac session; it is currently trading around 1206. The co-ordinated intervention in USD/JPY had a big impact on a market that looks to have been caught wrong-footed. The market is bouncing off the 1200 area after absorbing what could have been around $100 billion USD’s entering into the system. I have been skewed toward fading a dip, looking for a retest of the pivotal 1230-1235 area at some point. So I will be watching closely to see how this clean out continues to unfold. Strong support comes in back toward 1197-1200 but a sustained break back below there and we could see the downtrend reassert itself. The wind has been taken out the bullish USD sails for now, and we could see some consolidation as the market tries to find its footing again, 1195-1215 should cover it for now.  

• EUR/USD -  Asian range 1.1502-1.1515, Asia is currently trading 1.1510. The pair stalled and topped out around the 1.1550 area at the first time of asking. The move higher post the FOMC together with the forced US Dollar selling brought about by the injection of around $100 billion through Yen intervention saw a market that was ramping up its short EUR exposure wrong-footed. I remain skewed in favour of fading rallies with this pivotal weekly 1.1500-1.1550 area coming back into play. I will be watching closely over the short-term to see if this move lower in the USD is anything more than a knee-jerk reaction to the intervention in the Yen and if it can build on its initial reaction. For the short-term it seems we should be prepared for some ranges as those extra USD’s work themselves through the system. 
• GBP/USD - Asian range 1.3420-1.3433, Asia is currently dealing around 1.3425. The pair topped out around the 1.3500 area. On the day, the resistance remains toward the important 1.3500-1.3550 area once again. Looking for the move to turn lower, again. Though that might be wishful thinking and it looks like we are firmly back to chopping around aimlessly within the wider 1.3000-1.3800 range that has captured the last 15 months of trading.   
• Data: France June YTD Budget Balance, US June Trade, US June JOLTS Job Openings

Fig 1: EUR/USD Spot Weekly Chart

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

• The range for gold continues to be narrow today at $4,040 - $4,069.
• Flows have been modest today with minor gains of +0.16% to US$4,058.
• Gold continues to trend near to the 20-day EMA of $4,073 looking for a catalyst.
• The near term outlook is for much of the same as the FED looks to cool inflation which in turn has reduced expectations for near-term rate cuts. This raises the opportunity cost of holding non-yielding gold. Investors are following suit with ETF inflows drying up as western investors shift capital toward high-yield fixed-income and tech-driven equities.
• The Korean central bank will buy locally produced gold, according to a Monday statement.  The Bank of Korea has created a cooperation framework with domestic gold producers, the Korea Exchange and the Korea Securities Depository to support the effort.  The move allows the central bank to diversify its gold procurement channels aside from current purchasing methods.

Fig 1:  Gold continues to trend near to 20-day EMA

source: Bloomberg Finance LP/ MNI 

The USD/JPY range today has been 1597.18-157.75 in the Asia-Pac session, it is currently trading around 157.65, +0.30%. The pair is looking to bounce off its support back toward the 155 area. Co-ordinated intervention with the US is not something you see very often so it again adds more two-way risk to this trade and a market that was very short Yen(Fig.1) can’t just shrug off an 800-900 point retracement without absorbing some pain. The issue is by not touching rates and there are some intimating this intervention could push the hike out further. The carry trade, though having to bear some punishment in the short-term, will continue to appeal to those looking to add risk and get paid for it. On the day, the strong support in the 155-157 area held at the first time of asking, through here and the 149-152 support comes back into play. Everyone will be watching to see if this support can hold and build a base from which to move higher again. Initial resistance is back toward 159-161 and I suspect we see sellers re-emerge around there initially.

• Alexander Stahel on X: “WSJ - Why Bessent Is Leaning on the Fed To Help Prop Up Japan’s Currency. “Washington’s stake in the yen runs through the Treasury. A sustained defense would mean Tokyo unloading them when 30-year Treasury yields have risen to its highest level since 2007.”
• Robin Brooks On X: “The Yen isn't falling because evil speculators are ganging up on Japan. It's falling because gov't bond yields are way below where they should be. This creates a steady outflow that one-off interventions can't fix. This is why intervention can't work.”
• CFTC Data up to 28/07/2026 shows Asset Managers adding back to their newly built short Yen position, -80 077(Last -77 443). The Leveraged community did the same adding to their own large core shorts, –124 575(Last -114 030).
• Options : Close significant option expiries for NY cut, based on DTCC data: 163.00($755m), 163.50($1.42b), 164.00($1.18b). Upcoming Close Strikes : 155.00($1.79b Aug 6), 162.00($2.92b Aug 6), 162.50($2.1b Aug 6) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 171 Points

Fig 1 : JPY CFTC Data

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

Fig 2 : USD/JPY Spot Daily Chart

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