OIL: Oil Claws Back Some Overnight Falls

Nvidia fell in after-hours trading as the company said the US government will begin requiring a license to export its H20 chips to China. This has seen stocks come under pressure for most of the Asian session and the USD giving back most of yesterday's gains. Another fix higher in USD/CNY at 7.2133 continues to point to the view that the PBOC is going to slowly manage the currency lower.

• AUD/USD - Asian range 0.6323 - 0.6362, AUD has traded sideways for most of the Asian session. The market will be watching for signs of exhaustion as move the higher finally stalls. Dips back to the 0.6250 area should find buyers once more.
• AUD/JPY - Asian range 90.32 - 91.05, AUD/JPY was under pressure from the open as risk came under pressure during the Asian session. Price goes into the London open around 90.40 having broken the overnight lows. Multiple attempts to get back above 91.50 have stalled and direction has been quick to turn as risk comes back under pressure.
• NZDUSD - Asian range 0.5886 - 0.5915, NZD has traded slightly bid for most of the session as the USD gives back yesterday's gains. Like the AUD, the market will be watching for signs of exhaustion and some reversion back to the mean. Expect buyers to return first around 0.5800/30, then 0.5730/60.
• AUD/NZD - Asian range 1.0729 - 1.0769, the cross has drifted lower in the Asian session back towards the overnight lows around 1.0730 area. The cross is going into London pretty directionless but rebounds will likely be capped as stale longs will use any bounce back to 1.0850 to lighten up. Tomorrow, we have the Australian employment print, along with NZ CPI. 

Fig 1 : NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg

Q1 NZ CPI data print on Thursday and are expected to show a pickup in inflation from Q4 but still comfortably within the RBNZ’s 1-3% band. Bloomberg consensus is at 0.8% q/q & 2.4% y/y, in line with the RBNZ’s February forecast but higher than Q4’s 0.5% q/q & 2.2% y/y. Both tradeables and non-tradeables are projected to post a stronger quarterly increase than in Q4.

• There is quite a range of forecasts amongst the 14 respondents in Bloomberg. Headline inflation ranges from 0.3% to 0.9% q/q and thus 1.9% to 2.5% y/y.
• The domestic banks are all close to consensus with Kiwibank and Westpac in line and ANZ, ASB and BNZ slightly higher at 0.9% q/q & 2.5% y/y.
• There are only 8 forecasts in Bloomberg for tradeables and non-tradeables but consensus is at 0.8% q/q. The RBNZ forecast 0.7% q/q and 0.9% q/q respectively.
• Tradeables projections on Bloomberg range from 0.4% to 1.0% q/q with Westpac forecasting 0.6%, Kiwibank 0.7%, ANZ 0.8% and BNZ 1.0%. Monthly price data showed that fuel and food prices rose in Q1.
• Non-tradeables are between 0.6% and 0.9% q/q with BNZ & Kiwibank at 0.8% and ANZ & Westpac 0.9%. This component is monitored closely as it is domestically driven and the annual rate should print at its lowest in around 4 years.
• The RBNZ will release its measure of underlying inflation from its sectoral factor model. It eased 0.2pp to 3.1% in Q4, still above the top of the band, but may drop inside it in Q1. 

TYM5 traded in a narrow 110-30+ to 111-04 range during the Asia-Pacific session, heading into the London open. It last changed hands at 111-01, down 0.01 from the previous close.

• The US 10-year yield has consolidated in a tight range of 4.3117 - 4.3369% in Asia, dealing around 4.33% as we head into the London open.
• US yields continued to benefit from comments made overnight by Deputy Treasury Secretary Michael Faulkner who said officials are discussing a move to loosen bank regulations and allow lenders to keep more Treasuries on their balance sheets.
• The market is keenly awaiting Fed Chair Jerome Powell’s speech later today discussing the economic outlook.
• Dips back towards 4.25/30% should now find supply, as the market consolidates heading into a long weekend.
• Today's Data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index.