BONDS: NZGBS: Richer After A Strong Post-Data Rally For US Tsys, NZ Manf PMI Up
In local morning trade, NZGBs are 7-8bps richer after a strong NY session for US tsys.
- US tsys finished near Thursday session bests (8-11bps richer) and well off early session cheaps after the morning's heavy round of economic data: PPI lower than expected (priors up-revised, however), retail sales largely in line with prior up-revised, and weekly claims largely in line.
- Core PPI (ex food, energy & trade services) inflation was surprisingly soft at 0.11% M/M (cons 0.3) after only a slightly upwardly revised 0.17% (initial 0.12) in March.
- Additionally, industrial and manufacturing production was slightly weaker in April than expected. Philadelphia Fed's Manufacturing Business Outlook Survey saw a strong improvement in the headline General Business Conditions Index in May, rising 22.4 points to a still contractionary -4.0 (-11.0 expected, -26.4 prior).
- The BNZ Manufacturing PMI Index rose to 53.9 from 53.2 in March, a fourth straight month >50 following 22 months below.
- Swap rates are 6-7bps lower.
- RBNZ dated OIS pricing is little changed across meetings. 25bps of easing is priced for May, with a cumulative 70bps by November 2025.
- Today, the local calendar will see RBNZ Inflation Expectations and Non-Resident Bond Holdings later.
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CNH: USD/CNH near 7.3300, Busy Data Day Headlined By Q1 GDP
USD/CNH tracks near 7.3265 in early Wednesday dealings, just under Tuesday highs around the 7.3300 level. CNH lost 0.23% for Tuesday's session, with the pair mostly on the front foot as broader USD indices rose for the session (the first gain since the start of last week). Spot USD/CNY finished up at 7.3158. The CNY CFETS basket tracker (per BBG) still fell though, down a further 0.21% to 94.41, fresh lows back to mid 2023.
- For USD/CNH technicals, we are above all key EMAs, the 20-day is near 7.3030, the 50-day around 7.2865. Upside focus is likely to rest on April 10 highs above 7.3700.
- For yuan sentiment, focus remains firmly on the tariff backdrop. US President Trump calling on China to reach out to him to kick start trade discussions. This came after China ordered a halt to Boeing aircraft deliveries late yesterday.
- Today is a busy data day in China with Q1 GDP out, along with March house prices and March monthly activity figures, as well as the surveyed jobless rate. Growth is expected to close to Q4 outcomes (projected at 1.4% q/q). China data outcomes have surprised somewhat on the upside in recent months (per the positive Citi CNY EASI trend).
- Still, it remains to be seen if any upside surprises today impacts yuan sentiment, as markets remain focused on the growth outlook and trade risks in 2025. UBS downgraded its 2025 GDP growth projection to 3.4% yesterday.
AUD: A$ Outperforms on Tuesday, But Softer Start To Today
Aussie along with the kiwi and pound were the only currencies in the G10 to strengthen against the greenback, as the former two continued to recover in a more stable market environment. AUDUSD reached a peak of 0.6383 before trending lower as the S&P weakened. The pair finished up 0.3% to 0.6344 but is down 0.1% to 0.6341 in today’s APAC trading as the risk pullback during the US session continued. It is already off the early lows though. The USD index rose 0.4%, as the euro weakened on slow progress on tariff negotiations.
- Technicals point to a short-term bullish tone with AUDUSD rising above 0.6267, 50-day EMA, which signals scope for the reversal to strengthen. Initial resistance is at Tuesday’s intraday high of 0.6383 with the reversal trigger at 0.6389. Initial support is at 0.6232, 20-day EMA.
- Kiwi outperformed the G10 leaving AUDNZD down 0.1% to 1.0756 and it is currently slightly lower at 1.0752.
- AUDJPY rose 0.4% to 90.88 but is down 0.3% to 90.65 so far today. Aussie gained some ground against the euro rising 0.9% to 0.5624 but is currently down 0.2% to 0.5613. AUDGBP was down slightly to 0.4795 but is down 0.1% to 0.4790 in APAC trading.
- Equities were mixed with the Euro stoxx up 1.2% but the S&P down 0.2%. Oil prices were steady with WTI at $61.53/bbl. Copper is off its intraday low but still down 0.2% and iron ore is $99-100/t.
- Today Westpac’s March leading indicator prints.
JGB TECHS: (M5) Off Highs, But Underlying Strength Persists
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.95 - High Apr 7
- PRICE: 140.32 @ 15:50 GMT Apr 15
- SUP 1: 139.52 - 1.0% 10-dma envelope
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs are extending the strong bullish reversal, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.
