FOREX: USD - BBDXY Treading Water
The BBDXY has had a range today of 1206.94 - 1208.33 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD continues to chop around without really going anywhere, trading a little higher after the BOJ hiked rates. On the day I still have very little conviction on direction, look for initial resistance again back towards the 1209-1210 area and above here the more important 1213-1216 area where sellers should remerge initially. Can this 1204 area continue to provide support if not a move below here would target 1198-1200.
- EUR/USD - Asian range 1.1717-1.1729, Asia is currently trading {EURUSD Curncy}. The pair continues to consolidate above 1.1700. On the day, support remains toward 1.1675-1700 initially, a break below here could potentially signal a deeper pullback. While this support hold it is skewed towards testing higher
- GBP/USD - Asian range 1.3374-1.3387, Asia is currently dealing around {GBPUSD Curncy}. The pair has once again rejected a move toward 1.3450 and is potentially starting to show the first signs of exhaustion. On the day, continue to watch for selling pressure above 1.3400, if this area continues to hold, look for a pullback to the more important 1.3250/1.3300 area. I continue to watch for signs of GBP potentially topping out, are we seeing the first signs ?.
- Cross asset : SPX +0.10%, Gold $4320, US 10-Year 4.14%, BBDXY 1208, Crude Oil $56.00
- Data/Events : EZ ECB Current Account/Consumer Confidence, France PPI/Retail Sales SA, Germany PPI/GfK Consumer Confidence, Italy Current Account Balance/Industrial Sales
Fig 1: BBDXY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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NZD: Asia-Pac: NZD/USD Turns Lower, Helped By A Poor Dairy Auction
The NZD/USD had a range today of 0.5628 - 0.5662 in the Asia-Pac session, going into the London open trading around 0.5630, -0.50%. The NZD/USD has drifted lower dragging the AUD with it in our session potentially being impacted by a poor Dairy auction. The NZD is consolidating within a 0.5630-0.5700 range. The place to fade NZD again is closer toward 0.5750 and then 0.5850 should we see that area again. On the day if the support around 0.5630 gives way, then look for another test of the 0.5600 area.
- "FONTERRA CEO: STILL FEEL CONFIDENT ABOUT NZ$10/KG MILK PRICE, SEES SIGNIFICANT GROWTH IN CHINA MARKET. NZ FARMERS MAY USE CAPITAL RETURN TO REDUCE DEBT" - BBG
- "NZ Q3 PRODUCER PRICE INDEX INPUTS +0.2 PCT VS PREVIOUS QUARTER
- (prior 0.6%), NZ Q3 PRODUCER PRICE INDEX OUTPUTS +0.6 PCT VS PREVIOUS QUARTER" (prior 0.6%) - RTRS
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5480(NZD644m Nov 21), 0.5730(NZD434m Nov 19), 0.5835(NZD300m Nov19) - BBG
- The NZD/USD Average True Range for the last 10 Trading days: 41 Points
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
BONDS: NZGBS: Bull-Flattener, NZ-AU 10Y Continues To Grind Lower
NZGBs closed showing a bull-flattener, with benchmark yields 1-5bps lower.
- ICYMI, NZ Treasury issued NZ$6bn of May 2036 nominal bond after a syndicated tap yesterday.
- Moreover, NZGBs have outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials narrower by 4-5bps.
- At -32bps, the NZ-AU 10-year yield differential is at its lowest since 2020. (see chart)
- Cash US tsys are flat to 1bp cheaper, with a steepening bias, in today's Asia-Pac session after a modest rally. Nvidia's earnings are in focus and due after the market close on Wednesday.
- NZ producer output prices rose 0.6% q/q in Q3.
- Swap rates closed 3-6bps lower, with implied swap spreads tighter.
- RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for November, with a cumulative 34bps by February 2026.
- Tomorrow, the local calendar will be empty.
Bloomberg Finance LP
JPY: Asia-Pac: USD/JPY Consolidates Gains Above 155.00
The USD/JPY range today has been 155.21 - 155.59 in the Asia-Pac session, it is currently trading around 155.35, -0.10%. The move lower in risk did not bring the usual bout of Yen buying as its safe haven status begins to be questioned. USD/JPY I suspect will remain well supported on dips as the market remains wary of the new leadership policies together with a reticence to hike rates. I will be watching again for dips on the day back toward 154.80-155.00 to be supported initially. This break should now turn the markets focus back toward 160, much to the displeasure of the MOF/BOJ. Look for any pullback towards the 152.50 area to be well supported first up if seen.
- MNI AU - Core Machine Orders Surge, Reinforcing Positive Capex Backdrop: Japan Sep core machine orders were comfortably above market forecasts, although arguably this was a risk after the recent Q3 GDP preliminary print (which showed stronger than expected business spending in Q3). From a policy makers standpoint, it suggests resilience/strength in the business/capex sector (reinforcing what the Q3 GDP print stated). Focus will be on if these trends sustain into Q4, while the wage outlook is also a key BoJ watchpoint. Our policy team notes that key wage data will not be available until the Jan policy meeting next year. This sets up a possible Dec hold from the BoJ (although sharp yen weakness could prompt a move).
- Options : Close significant option expiries for NY cut, based on DTCC data: 153.00($1.26b). Upcoming Close Strikes : 155.00($1.49b Nov 20), 150.00{$1.3b Nov 20) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 97 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
