FOREX: USD - BBDXY Finds Bids Below 1200 On First Attempt
The BBDXY has had a range today of 1198.47 - 1202.28 in the Asia-Pac session; it is currently trading around 1202, +0.20%. The BBDXY has seen quite a reversal from above 1210 and presents as an ugly bearish shadow on the daily chart. The market is looking at everything through rose tinted glasses and the way risk trades expects the conflict to be short and the Straits back open similarly and up and running. I am not so optimistic and feel the USD is central to how risk unfolds from here. On the day, I suspect dips could now be supported with the first buy-zone back toward 1197-1198 and then 1191-1194. Bulls will be looking for demand to return down here to form a base of sorts from which to retest the 1210-1215 area.
- EUR/USD - Asian range 1.1609-1.1647, Asia is currently trading 1.1610. The pair drifted higher after finding some demand below 1.1600 but its bounce has been pretty underwhelming considering the moves seen elsewhere. The price action does not look great for the bulls and I suspect rallies will now be faded as the market eyes a move back toward the 1.1400-1.1500 area. On the day, the first sell-zone is back toward 1.1650-1.1680 and then the 1.1750 area, looking for the move lower to now build for a potential test of the pivotal 1.1400-1.1500 support. CFTC Data shows asset managers are very long the EUR and this move could potentially get them to start paring back some of that exposure.
- GBP/USD - Asian range 1.3330-1.3387, Asia is currently dealing around 1.3335. GBP looks like it is now trying to put a top in place. It really needs to close below the pivotal 1.3300 area to confirm but I suspect rallies could now be faded. On the day, I suspect rallies toward 1.3400-1.3450 will continue to be faded as the USD looks to build on its gains. Sellers will be looking for the 1.3300 area to give way, signaling a potential move back to 1.3000.
- Cross asset : SPX -0.20%, Gold $5180, US 10-Year 4.11%, BBDXY 1202, Crude Oil $77.40
- Data/Events : France Jan. Industrial Production, Germany Feb. Construction PMI, ECB’s Guindos speaks, Italy Jan. Retail Sales, ECB’s Rehn speaks, Bundesbank’s Nagel presents 2025 annual report, US Feb. Challenger Job Cuts, US Weekly Initial Jobless Claims, ECB’s Lagarde speaks, The ECB publishes accounts of its last meeting.
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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BONDS: NZGBS: Closed Richer Before RBA Decision, NZ-US 10Y Diff Tighter
NZGBs closed 1-2bps richer across benchmarks, solidly outperforming US tsys on the day. The NZ-US 10-year yield differential finished 7bps tighter at +32bps. Today’s move, therefore, allowed the differential to hold the range it has traded in over the past 12 months.
- Notably, the NZGB market was closed at the time of today’s RBA decision. Accordingly, there may be some negative spillover from ACGBs given the sharp sell-off post the RBA’s 25bps rate hike.
- Swap rates closed 2-3bps lower.
- RBNZ-dated OIS pricing closed little changed across meetings. No tightening is priced for February, while December 2026 assigns 51bps.
- Tomorrow, the local calendar will see Q4 Employment data.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
Bloomberg Finance LP
FOREX: USD - BBDXY dragged Below 1190 By The Bounce In The AUD
The BBDXY has had a range today of 1188.83 - 1191.78 in the Asia-Pac session; it is currently trading around 1189. Risk has had an impressive turnaround thanks to a very strong US ISM Man PMI. What's interesting about the USD price action is that recently this type of price action would have seen the USD give back most of its recent gains, but it continues to hold around 1190, the large bounce in the AUD is seeing it begin to pullback in Asia though. I suspect that bounces will continue to find sellers in the short-term as the USD still has few friends. On the day, the first resistance remains in the 1190-1195 area and then more importantly back towards 1200 where I suspect sellers would return in earnest.
- EUR/USD - Asian range 1.1787-1.1815, Asia is currently trading 1.1814. Price action has left an ugly bearish shadow on the weekly chart, but we are approaching levels that should start to see some buyers return. On the day, the support is between the 1.1760-1.1790 area initially a move through here would open up a deeper reversion back to the important 1.1700 area where I suspect buyers would again return. I suspect a bounce back toward the 1.1870-1.1910 area would find sellers first up as the pair looks to consolidate.
- GBP/USD - Asian range 1.3661-1.3691, Asia is currently dealing around 1.3691. The pair like everything else had an ugly weekly close leaving a clear rejection of the 1.3850 area. On the day, first support is 1.3600-1.3650 then the 1.3500 area.
- Cross asset : SPX +0.25%, Gold $4820, US 10-Year 4.28%, BBDXY 1189, Crude Oil $61.93
- Data/Events : Italy HCOB Italy New Car Registrations, Spain Unemployment Change, France CPI
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
