US: Trump Speech At NRCC Dinner Underway Shortly

NZD/USD tracks near 0.5710/15 in early Monday dealings. The Kiwi lost 0.44% on Friday, weaker with most other commodity FX, but underperforming the EU currencies. We were still up 2% for last week, amid broad USD weakness, although again the EU currency bloc, led by SEK, were the strongest performers. 

• For NZD/USD technicals, we are wedged between the 20 and 50 day EM support points, which are between 0.5690/0.5700, while on the topside, the 100-day EMA is near 0.5765. We couldn't break above this resistance point last week.
• In the cross asset space on Friday, US yields were firmer, but mixed for last week. The 10yr Tsy up around 10bps last week, but the 2yr was near flat, close to 4.00% as US growth concerns continue. US payrolls were resilient, but they pre-date the deterioration in consumer and business confidence. US equity finished higher, but futures are weaker today in the first part of trade.
• NZ-US 2 swap spreads sit at -48bps, close to recent highs and continue to argue for higher NZD/USD levels.
• EUR/NZD rallied sharply - putting the cross north of 1.90 for the first time since the COVID pandemic.
• The data calendar is quiet today. Tomorrow we get Q4 manufacturing activity.
• NZ Deputy PM Peters will travel to the US this week for high level talks. 

ACGBs (YM -1.0 & XM -1.5) are modestly cheaper after US tsys finished Friday moderately cheaper following US payrolls, which closely matched expectations. US yields moved higher as equities recovered while European bond markets ended little changed after the large selloff in previous sessions. US equity markets rebounded from initial losses to close 0.5% higher.

• US payrolls rose by 151k in February, trivially below the 160k consensus estimate. Net revisions to previous months were negligible. The unemployment rate increased to 4.1%, from 4.0% in January.
• Fed Chair Powell said the central bank doesn’t need to hurry to ease policy further and the path to 2% inflation is expected to be bumpy. Fed governor Waller said he wouldn’t support a March cut but sees room to cut rates by two to three times this year.
• Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at +12bps.
• Swap rates are 1-2bps higher.
• The bills strip is -1 to -2 across contracts.
• The local calendar will be empty today.  
• This week, the AOFM plans to sell A$300mn of the 2.75% 21 May 2041 bond on Tuesday and A$800mn of the 3.50% 21 December 2034 bond on Wednesday. 

• Gold finished strongly on Friday to record yet another strong week.
• A gain of +1.79%, went part of the way to erasing the previous week’s losses.
• With only one down week this year, gold has surged 10% year to date with all eyes on whether it can rally through the US3,000 level.
• Opening the Asian session at $2,913.35 Gold sits marginally above it’s 20-day EMA of 2,893.68 but with all trend lines trending upwards, it is clear that the bullish trend is in place.
• The World’s largest gold-backed ETF, the SPDR Gold Trust, saw it holdings rise to a multi-month high and is reflective of the general level of demand currently for gold.
• Jordan’s Central Bank has announced an increase in gold reserves by more than 10% year on year.