ASIA FX: SEA FX Firmer, But Lags Parts Of NEA

NZGBs closed near session cheaps, with benchmark yields 6-8bps higher and the 2/10 curve steeper. With the domestic calendar again empty, today’s local market price action reflected heavy trading in global bonds following yesterday’s news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.

• Nevertheless, NZGBs underperformed the $-bloc slightly, with the NZ-US and NZ-AU 10-year yield differentials 1-2bps wider.
• “New Zealand will commit an extra NZ$100m to the Elevate venture capital fund in next week’s Budget, Finance Minister Nicola Willis said in a speech Tuesday in Wellington. Elevate began in 2020 to support high-growth tech-based startups by co-investing in private venture capital funds.” (per BBG)
• Swap rates closed 9-11bps higher.
• RBNZ dated OIS pricing closed 1-6bps firmer across meetings. 25ps of easing is priced for May, with a cumulative 70bps by November 2025.
• Tomorrow, the local calendar will see Card Spending and Net Migration.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

• Gold steadied in Asia trading following  its second largest daily decline this year overnight and gained +0.10% to US$3,239.52 from where it opened trading in Asia this morning gold at US$3,236.27.
• From the high of $3,431.77 on May 06, gold is now down over 5%.
• Positioning from Hedge Funds is much more neutral with CFTC data showing that bullish bets have been scaled back to their lowest in more than a year.
• Gold is likely to return its attention back now to the FED and and the direction of interest rates as trade wars risks appear to have subsided, for now.
• Gold has now traded below the 20-day EMA of $3,276.66 with the next technical level the 50-day EMA at $3,164.09.

The BBDXY has had an Asian range of 1237.68 - 1240.11, Asia is currently trading around 1237. USD/JPY has edged lower after Japanese Finance Minister Kato said he will seek an opportunity to discuss currency matters with US Treasury Secretary Scott Bessent when the two are in Canada for a meeting of Group of Seven officials."*UCHIDA: WAGES EXPECTED TO KEEP RISING DUE TO TIGHT LABOR MARKET" - BBG. The USD/CNY fix was set at 7.1991. Today's fixing is sub the 7.2000 level for the first time since Apr 7. It comes despite the stronger USD index levels overnight, although some offset was from lower USD/CNY levels.

• EUR/USD -  Asian range 1.1085 - 1.1117, Asia is currently trading 1.1115. EUR/USD has had a quiet session as the market digests the overnight moves. The market is still expected to use dips as a buying opportunity and dips back towards 1.09/1.10 should see buyers remerge.
• GBP/USD - Asian range 1.3170 - 1.3200, Asia is currently dealing around 1.3195. GPB broke through its support around 1.3200, if this break can hold we could target a move back to 1.3000 where buyers should be expected to return.
• USD/JPY -  Asian range 147.73 - 148.48, the Asia session is currently dealing around 147.85. USD/JPY scythed through the 1.4700 area as shorts pared back some of their positioning. With stocks on a tear as momentum type funds are forced back into the market the USD will continue to benefit particularly against currencies like the JPY. This will now test the conviction of the USD bears short-term, but levels back towards 150/151 should offer good levels for those that want to express this view.
• USD/CNH - Asian range 7.1789 - 7.2045, the USD/CNY fix printed 7.1991. Asia is currently dealing around 7.1835. A lower fix even with the USD broadly higher across the board gave USD/CNH the impetus to extend lower, sellers should be found on any bounce back towards 7.24/25 again.
• Cross asset : SPX -0.38%, Gold $3236, US 10-Year 4.45%, BBDXY 1237, Crude oil $61.76

• Data/Events :Ger ZEW Survey, US CPI

  Fig 1: GBP/USD Spot Daily Chart

  

• Source: MNI - Market News/Bloomberg