JPY: USD/JPY Rebound, But Remains Within Recent Ranges, Tokyo CPI Out Today
After SEK, JPY was the weakest performer in the G10 space through Thursday, losing around 0.50%. The pair spent most of the post-Asia close recovering from earlier lows near 129.00. We got above 130.60, before settling back into 130.20/25 by the NY close. The USD bounce post the GDP beat was short-lived, as details disappointed, but US yields still finished higher across the curve, the 10yr back above 3.50%.
- This, coupled with higher yields elsewhere, and a firmer risk-on tone in the equity space, weighed on yen performance.
- Highs from 18 Jan, just above 131.60 remain intact, whilst yesterday's lows came in close to 129.00. Overall, we remain within recent ranges.
- On the data front today is Tokyo CPI for Jan. The market expects headline y/y at 4.0%, versus a revised 3.9% prior. Ex-fresh food is forecast at 4.2% y/y (from 3.9%), while ex food & energy is expected at 2.9% y/y (2.7% prior).
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NZD: Struggling Above 0.6300
(MNI Australia) NZD/USD struggled to maintain positive momentum evident yesterday post the Asia close. After getting near 0.6320, the pair slipped to lows at 0.6264 in NY trading. We currently track slightly firmer at 0.6275. The Kiwi was an underperformer against the rest of the G10 except for JPY.
- Firmer risk appetite inspired by China's decision that inbound travellers will no longer be required to quarantine, while also downgrading the management of the Covid virus, gave way to a more cautious tone.
- US equities were mixed with the Nasdaq notably weaker, with several tech companies weighed by production/demand concerns emanating from China. US yields pressed higher across the curve (+6-11bps), which also weighed on sentiment for the NZD.
- The AUD/NZD cross remains on the front foot. The pair got close to 1.0750, while dips sub 1.0700 were supported.
- NZD/USD remains out of the uptrend channel, while the 20-day EMA comes in at 0.6299. On the downside the 200-day EMA sits at 0.6255. There is no major domestic data released until the new year.
AUD: A$ Supported By Further Easing Of China Travel Restrictions
MNI (Australia) - AUDUSD has started today’s session around 0.2% higher on Friday’s close at 0.6732. Aussie rose against kiwi, yen and pound. It has been supported by the news that China will no longer require incoming travellers to quarantine. DXY is 0.1% lower.
- AUDNZD is up 0.4% since Friday at around 1.0730. AUDJPY is 0.8% higher to 89.86. AUDGBP is up 0.5% to around 0.5596. AUDEUR is flat at 0.6326.
- Equity markets were mixed overnight as the improvement in risk sentiment was unwound during the US session. The S&P 500 finished down 0.4% while the Eurostoxx rose 0.4%. Oil prices rallied during the NY session to a high of $81.18/bbl but gave up those gains to be only 0.2% higher than Friday’s close at around $79.70. Copper also rallied but has closed well off the highs up 1% on Friday. Iron ore is up almost $3 to $113.30.
- There are no data or events in Australia this week and there is only secondary data in the US.
US TSYS: Rates Hold Lower, Narrow Band
Early Tuesday risk sentiment after China said it will end quarantine requirements for inbound travelers in early January, gradually evaporated as Tsys continued to drift lower on very light volumes by the close (TYH3<585k), while equities reversed early gains, Dow shares outperformed mildly weaker SPX and Nasdaq shares ahead the FI close. Trade volumes will hopefully improve Wednesday as London returns from extended Christmas holiday.
- Carry-over weakness w/ US$ index lowest levels in six months, extended losses from last week when data showed that US core PCE prices, the central bank’s preferred inflation gauge, fell to a four-month low of 4.7% YoY in Nov.
- Little react after $42B 2Y note auction (91282CGD7) stops through: 4.373% high yield vs. 4.390% WI; 2.71x bid-to-cover vs. 2.64x prior. Indirect take-up climbs to 62.22% vs. 56.98% last month, direct take-up 18.71% vs. 20.62%. primary dealer take-up 19.07% vs. 22.39%.
- Focus turns to Wed's data: Richmond Fed Mfg Index (-9, -10) and Pending Home Sales MoM (-4.6%, -1.2%); YoY (-36.7%, --) at 1000ET
- US Tsy auctions: $22B 2Y FRN Note auction re-open (91282CFS5) at 1130ET, $43B 5Y Note auction (91282 CGC9) at 1300ET
