BONDS: NZGBS: Richer With US Tsys Ahead OF RBNZ Decision

• 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: 140.33 @ 16:50 GMT Apr 25
• SUP 1: 139.38 - 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 holding the bulk of the recent 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.

USD/CNH tracks near 7.2920 in early Monday dealings. For Friday's session, CNH was little changed, with fairly tight ranges post the Friday end to the Asia Pac session. Broader USD indices ticked higher (BBDXY up 0.18%), but remain sub recent highs. USD/CNY ended up at 7.2867, while the CNY CFETS basket was close to unchanged, ending last week at 96.29.

• For USD/CNH we continue to see support in the low 7.2800 region, which rests just under the 50-day EMA. Further south is the 100-day EMA near 7.2745. Recent highs in the pair rest close to 7.3350.
• Note at 10am local time this morning we will hear from a variety of agencies, including the NDRC and PBoC, on policies to stabilize employment and promote growth. This followed the Politburo meeting at the end of last week, which focused on the economy.
• It seems unlikely that this morning's press conference will delivery significant new policy initiatives (such as fresh monetary policy support) outside of what was announced on Friday (see this link). While markets may have been left a little disappointed on Friday, until China has a clearer picture on final tariff levels from the US there may be less incentive to announce fresh large stimulus measures.
• Over the weekend we had March industrial profits, which were stayed positive y/y but down from the Feb pace. On Wed we get the April PMI reads, with the Caixin manufacturing print also out. The consensus for the manufacturing side is back sub 50.0 for the official and Caixin reads. 

The NZD had a range Friday night of 0.5949 - 0.5983, Asia is opening around 0.5960

• US Treasury Secretary Bessent stated that US trade talks, especially with Asia are “moving along very well” in an interview with ABC.
• (Bloomberg) –”With global growth slowing due to increased political uncertainty, trade wars, MUFG analysts see the New Zealand dollar weakening, while the euro will benefit further from global investors rushing to safety. They target 1.96 for EUR/NZD long with stop at 1.87”
• “Even if trade deals/arrangements are put in place to partially reverse tariffs in the near-term, they are unlikely to be sufficient to prevent the global economy from slowing further in the near-term which leaves risks tilted to the downside for higher beta commodity currencies such as the NZD,” they concluded.
• The NZD traded sideways at the end of last week with support holding around 0.5940, conditions were there for a corrective retracement lower but as of yet the NZD has remained well supported.
• The price action continues to suggest though that dips will probably find demand, first support on the day is 0.5900 then 0.5800/50.
• CFTC data show Asset managers have slowed their pace of buying last week, Leveraged funds though have been using dips to reduce their shorts.
• Data : BBG April NZ Economic Survey

Fig 1: CFTC NZD Holdings

Source: MNI - Market News/Bloomberg