FOREX: USD(BBDXY) - Holds Above Support But Inability To Bounce Stands Out

ACGBs (YM -8.0 & XM -6.0) are heavy to start the week on a local data-light day. 

• MNI Techs (YMU6): The M/T uptrend that started Mar 23 is intact and pullback since Jun 25 appears corrective. MA studies on the continuation chart are in a bull-mode position highlighting a dominant uptrend. An extension of the corrective cycle would open 95.428, a trendline support drawn from the Mar 23 low on the continuation chart.
• TYU6 is dealing at 109-01+, -0-07 from closing levels in today's Asia-Pac session, pressured by firmer oil prices. There has been no cash trading today so far with Japan out on holiday.
• "IRAN'S REVOLUTIONARY GUARDS SAY TWO OIL TANKERS WERE BLOWN UP AFTER ATTEMPTING TO TRANSIT SOUTHERN ROUTE OF STRAIT OF HORMUZ - [RTRS]"
• Cash ACGBs are 6-8bps cheaper.
• The bills strip has bear-steepened, with pricing -2 to -8 across contracts.
• RBA-dated OIS pricing shows modest tightening across all meetings, with the probability of a 25bp hike rising from 27% for August to 84% by December 2026.  
• Tomorrow, the local calendar will be empty.
• This week, the AOFM plans to sell A$900mn of the 2.75% 21 June 2035 bond tomorrow and A$900mn of the 3.25% 21 April 2029 bond on Friday.

Bloomberg Finance LP

NZGBs closed 5-7bps cheaper, with the NZ-US 10-year yield differential at +16bps, its highest level since late May, after reaching as low as -10bps earlier this month. However, there has been no cash trading for US tsys so far today with Japan out on holiday.

• The 10-year differential had narrowed from around +50bps in late March, when NZ's long-term issuer default rating outlook was revised to negative from stable.
• Since then, the NZ–US 1Y3M swap spread narrowed by around 100bps, with the 10-year yield differential compressing broadly in line.
• However, the NZ–US 1Y3M swap spread has widened by around 50bps during July, reflecting lower US rates following softer US inflation data and higher NZ rates ahead of tomorrow's Q2 CPI release.
• Swap rates closed 3-6bps higher.
• RBNZ-dated OIS pricing is currently 11-30bps firmer across meetings than this month’s pre-hike levels. Ahead of tomorrow’s Q2 CPI data, the market has priced 24bps of tightening for the September meeting, with 78bps (3.28%) priced by February 2027. The market is now also pricing an expected OCR peak above 3.50%, marking a new cycle high.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.50% Apr-33 bond, NZ$150mn of the 4.25% May-36 bond and NZ$50mn of the 5.00% May-54 bond.

Bloomberg Finance LP

• Gold opened weaker but found support to push back above $4,000.  
• Up +0.15% today gold is currently at US$4,023.
• The range last week (relative to the average for the year) saw a tight range of $3,959 - $$4,103 and looking to the week ahead, it appears likely that this may continue.
• With both the 20-day SMA and the 50-day EMA above current price action, this creates strong technical resistance above that caps short-term recovery attempts.
• Safe-haven flows stemming from escalating geopolitical events (such as Middle East infrastructure threats) could prompt dip-buying though with the 20-day EMA at $4,090 - it likely limits upside potential.
• Look for gold to trade in a range of $3,950 - $ $4,090 to start the week with price action relatively muted.  
• There is some macro data out of the US, but it is unlikely to be a game changer for US rate assumptions, until the July 29 Federal Reserve rate decision. Key triggers to watch this week include fash Manufacturing and Services PMIs (Friday) Initial Jobless Claims and Employment Data (Thursday)Crude Oil Price Shocks, which may alter the Fed's long-term inflation trajectory and non-yielding asset costs.