US TECHNOLOGY: Oracle: Cancels Plans to Expand In Abilene

The NZD/USD had a range overnight of 0.5988 - 0.6047, Asia is trading around 0.6000. The NZD drifted lower as the rotation out of US tech stocks continued and the USD grinded higher, adding to the initial headwinds from yesterday's unemployment rate. On the day, the NZD is pressing its first support around the 0.5970-0.6000 area as the market looks to find a base from which to regain its upward momentum. A break below this support could signal a deeper pullback toward 0.5900 and put the test of 0.6100 on hold for now.

• MNI INTERVIEW: RBNZ To Keep OCR Steady - McDermott. The Reserve Bank of New Zealand’s hawkish tone late last year pushed fixed mortgage rates higher despite a 25-basis-point cut to the Official Cash Rate, effectively tightening financial conditions and reducing the need for further near-term rate changes, a former assistant governor told MNI, noting that a stronger New Zealand dollar will add to that restraint.
• Bloomberg - “New Zealand house prices fell for a second straight month in January, hitting a two-and-a-half year low as buyers stay on the sidelines until they are more assured about the economic recovery.”
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5910(NZD399m). Upcoming Close Strikes : none - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 63 Points

Fig 1: NZD/USD Spot Daily Chart

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

Source: Bloomberg Finance L.P./MNI 

While it continues to eye nominal coupon auction size increase at some point in upcoming quarters, and made its clearest signal yet that it would be looking increasingly toward bills to meeting financing requirements, Treasury's near-term outlook for bill sales looks to be largely as anticipated.

• As expected Treasury has no plans to upsize current bill auction sizes and as usual will start to pull them back going into the April tax receipt season.
• Per the Refunding policy document, "Treasury expects to maintain the offering sizes of benchmark bills at or near current levels into mid-March.  By late March, Treasury anticipates incrementally reducing short-dated bill auction sizes in light of the April 15 tax date.  These reductions will likely lead to a cumulative $250-300 billion net decline in total bill supply by early May."
• TBAC estimates that the net implied change in bills is basically flat through the first half of the calendar year, with $260B increase in supply through March followed by a drop of $242B in the Apr-Jun quarter (assuming a total of $103B in buybacks, based on previous quarters' results). This is calculated as: net marketable borrowing minus net coupon issuance plus buybacks as seen in the table. Note that buybacks
• Below is the TBAC presentation to the Treasury's estimates for bill financing as well as cumulative net issuance by Treasury coupon segment.