CNH: Pressured On Thursday
CNH was pressured on Thursday as broader USD trends dominated flows. A cautious ECB and a firmer than forecast US GDP print boosted the greenback.
- USD/CNH prints a touch below the 7.17 handle, the pair rose ~0.2% yesterday.
- The 20-Day EMA comes in at 7.1827, a break through here opens high from July 19 (7.2368). On the downside bears look to target the low from 27 July (7.1161), the 200-Day EMA comes in at 6.9994.
- In the equity space the Golden Dragon fell ~1.3% in the US, a reminder in yesterdays Asian session CSI300 was little changed falling 0.1%.
- The local docket is empty today.
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AUSSIE 10-YEAR TECHS: (M3) Trend Needle Points South
- RES 3: 97.040 - High Aug 03 2022 (cont)
- RES 2: 96.780/975 - High May 5 / High MAr 14
- RES 1: 96.440 - High Jun 2
- PRICE: 96.060 @ 16:11 BST Jun 27
- SUP 1: 95.875 - Low Dec 29 2022
- SUP 2: 95.670 - Low Jun 17 2022
- SUP 3: 95.094 - 1.0% 10-dma envelope
Bearish conditions in Aussie 10y futures remain intact and short-term gains are considered corrective. Recent trend lows reinforce current conditions and note that moving average studies remain in a bear-mode condition, highlighting the trend direction. The recent move lower opens the Dec 29 low of 95.875 for support. A break would strengthen bearish conditions. Initial firm resistance is at 96.440, the Jun 2 high.
US TSYS: Pressured After Strong US Data
TYU3 deals at 112-27, +0-00+, in line with late NY levels
- Cash tsys finished dealing 3-8bps cheaper across the major benchmarks, the curve bear flattened.
- Tsys were pressured from session highs after stronger than forecast Consumer Confidence and New Home Sales data which saw Fed rate hike expectations tick higher.
- FOMC dated OIS now price a terminal rate of 5.35% in November, there are ~65bps of cuts priced for 2024.
- The latest 5-Year auction tailed, weaker than average bid/cover ratio and indirect take up was observed.
- Earlier in the session tsys had firmed as the S&P500 opened firmer and a rally in Canadian bonds spilled over.
- CPI data from Australia provides the highlight in Asia-Pac today. Further out Fed Chair Powell is on a panel with ECB's Lagarde, BOJ's Ueda and BOE's Bailey.
BONDS: NZGBS: Weaker, Global Bond Yields Higher After ECB Lagarde & US Data
In early local trade, NZGBs are trading 1-3bp cheaper after global bond yields moved higher following hawkish commentary from ECB president Lagarde and firm data in the US. President Lagarde's speech at the ECB's forum in Sintra adopted a hawkish tone, indicating that the ECB is preparing for an interest rate hike in July and that officials do not foresee an imminent end to the current economic cycle.
- In May, durable goods orders experienced a 1.7% month-on-month increase, surpassing expectations of -0.9%. Additionally, new home sales saw a substantial 12.2% m/m rise in May, contrary to the expected -1.2% decline. Furthermore, the US Conference Board Consumer Confidence Index exceeded expectations and reached its highest level since January 2022.
- Swap rates are unchanged with implied swap spreads tighter.
- RBNZ dated OIS pricing is little changed with terminal OCR expectations at 5.64%
- The local calendar is light again today.
- In Australia, the CPI Monthly for May is slated with the market expecting +6.1% y/y versus +6.8% in April.
- NZ Treasury plans four nominal bond auctions in July with each weekly auction offering NZ$500m of bonds. Subject to market conditions, it is expected that a syndicated tap of the existing April 2033 nominal bond will be undertaken in July.
