FOREX: Safe Havens Outperforming, Rhetoric On FX Returns From Japan Officials
Dec-20 04:50
Safe havens have outperformed in the first part of G10 Friday trade. Most focus has rested on USD/JPY, with fresh highs reached before verbal rhetoric returned from Japan officials. The USD BBDXY index was last near 1305, slightly up for the session.
- USD/JPY got to highs of 157.93 in early trade, levels last seen in July of this year. We had FinMin Kato come across the wires stating he was deeply concerned about FX moves. Later on Chief FX Diplomat Mimura also expressed deep concern around FX moves. Both officials stated action would be taken if FX moves were excessive.
- USD/JPY has dipped a few times sub 157.00 (lows of 156.84) but support has been evident. We were last 157.20/25, around 0.15% stronger in yen terms. Earlier data showed y/y momentum for national CPI picked up in Nov, although some of the m/m detail was softer. The BoJ is waiting for the new year before deciding the timing on the next hike, with a strong focus on wage outcomes.
- USD/CHF is down a touch last near 0.8980. US equity futures are off, led by the tech side, (Nasdaq futures down 0.70%). Prospects of a government shut down (as the latest funding bill failed to pass the House) is a headwind for risk appetite.
- US yields are mostly lower, but losses are not much beyond 1bps at this stage.
- AUD/USD is down, last near 0.6225, off 0.20%, but above yesterday's lows under 0.6200. Softer commodity prices are also weighing on A$ appetite. NZD/USD is back towards 0.5620, slightly outperforming the AUD so far today. Earlier NZ sentiment and trade data didn't impact.
- Looking ahead, we have US PCE data for Nov, along with the final U. of Mich survey for Dec. Fed speak returns as well, with Daly and Williams due. Before that, UK retail sales prints.
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MNI EXCLUSIVE: PBOC Is Preparing For Increased Local Govt Bond Issuance
Nov-20 04:49
The PBOC is preparing for increased local government bond issuance. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
FOREX: USD Supported On Dips, But Aggregate Moves Modest, USD/JPY Around 155.00
Nov-20 04:48
The earlier outperformance from risk currencies has given way to a firmer USD backdrop as Wednesday trade has unfolded. The USD BBDXY index was last around 1279.20, a touch higher for the session. Earlier lows in the index were at 1277.22.
- Aggregate FX moves are not large at this stage. USD/JPY has traded with a positive bias, getting to highs of 155.14, but we sit back closer to 155.00 in latest dealings, around 0.25% weaker in yen terms. Earlier data showed slightly stronger than expected export growth, but a still persistent trade deficit in Japan
- US yields sit close to unchanged, albeit with a slight bias to move higher at the back end.
- US equity futures are off earlier highs but still sit in positive territory, last +0.15%. This comes ahead of the key Nvidia earnings release. Regional equities are mixed, but aggregate moves aren't much beyond 0.50% at this stage.
- AUD and NZD sit off earlier highs, but are only down 0.10% at this stage. AUD/USD last near 0.6525, NZD just under 0.5910. EUR/USD has slipped back under 1.0600.
- We remain within broader ranges though, as markets await fresh catalysts. Technical indicators still suggest USD dips will be supported.
- Looking ahead, the main focus will be UK CPI. We also hear from ECB and Fed speakers.
AUSSIE BONDS: Little Changed, RBA Governor Speech Tomorrow
Nov-20 04:06
ACGBs (YM -1.0 & XM +0.5) are slightly mixed, with a flattening bias, in today’s data-light Sydney session.
- "Investors such as UBS Asset Management and Jamieson Coote Bonds Pty see value in Australian bonds as the global debt selloff looks stretched and anticipation of a policy pivot grows." (See link)
- The latest round of ACGB Dec-35 supply showed strong pricing, with the weighted average yield printing 0.47bp through prevailing mids. The higher outright yield and steep curve likely aided the absorption of today’s ACGB supply. However, the notable worsening in global bond sentiment likely weighed on demand at today’s auction.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash ACGBs are flat, with the AU-US 10-year yield differential at +16bps.
- Swap rates are little changed.
- The bills strip is slightly cheaper across contracts, with pricing flat to -3.
- RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
- Tomorrow, the local calendar will see a speech by RBA Governor Bullock at the Women In Payments Conference.
