HKD: USD/HKD Eyeing Late August Lows Under 7.7800

The NZD/USD had a range of 0.5945 - 0.5961 in the Asia-Pac session, going into the London open trading around 0.5960, +0.08%. US equities roared higher as the market got ready for more rate cuts, the slight reprieve for the USD going into the print was quickly reversed and more cuts being priced in will increase the pressure on an already bearish USD market. Risk has ben pretty mute today, E-minis +0.05%, NQU5 +0.09%. The NZD/USD is still firmly within its 0.5850-0.6150 range, the CPI print last night will probably give pause to those wanting to fade the bounce, can it give it the boost it needs to regain upward momentum though, time will tell.

• MNI NZ: Gradual Recovery In Retail Card Spending. July NZ card transactions rose 0.6% m/m, the highest monthly increase this year, but the annual rate is still down 1.0%. Retail spending was up 0.2% m/m rising 1.2% y/y, signalling a gradual recovery in nominal consumption. It has been trending higher since the March trough at -1.8% y/y. The RBNZ is likely to cut rates on August 20 as inflation is in the band and the economic recovery remains subdued, and the July card data was consistent with this.
• (Bloomberg) - "China Consumer Loan Subsidy Expected to Drive Lending Recovery. China’s consumer loan interest subsidy program is expected to support a recovery in lending, especially for operating loans in the consumer services sector, while benefiting major banks and enhancing their market share, according to analysts from brokerages including China Merchants Securities." BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes :  0.5825(NZD300m Aug 14). - BBG
• CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
• AUD/NZD range for the session has been 1.0955 - 1.0969, currently trading 1.0960. The Cross continues to trade sideways after stalling towards the 1.1000 area once more. The range looks to be 1.0850-1.1000 for now.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The Asia-Pac USD/JPY range has been 147.70 - 148.17, Asia is currently trading around 148.05, +0.15%. USD/JPY’s gains going into the US CPI were quickly reversed after the print. Price is currently still holding above the support area between 146.00/147.00, a sustained move below this support is needed to turn the momentum potentially lower again. Until then, the recent range of 146.50-148.50 will continue to dominate. Decent demand seen below 148.00 in our session.

• JAPAN DATA July PPI In Line, Suggests Further Moderation In Headline Y/Y CPI: Japan's July PPI was close to expectations. The m/m outcome printed at +0.2%, in line with expectations, while the June outcome was revised to 0.1%m/m (originally reported as -0.2%). In y/y terms we printed at 2.6%, versus 2.5% forecast and 2.9% prior. 
• JAPAN DATA Import Prices Up For First Month Since Jan, Y/Y Still Negative : For July, export and import prices both rose in m/m terms. Export prices were up 1.6%, while import prices were up 2.4%m/m. For import prices this was the first m/m rise since January of this year. In y/y terms, both export and import prices were still in negative territory, but up from the June levels. Export prices were -5.4%y/y, while imports were -10.4%.
•  "JAPAN'S AKAZAWA: NOT BAD IF TRUMP EXEC ORDER COMES BY MID SEPT, US CAN'T GET INVESTMENT HELP IF PROMISES NOT KEPT. JAPAN COULD INCREASE ACTUAL US INVESTMENT PERCENTAGE, 1-2%, INVESTMENT FOLLOWS PAST CASES, COULD BE HIGHER" - BBG
• "AKAZAWA: WILL SUPPORT ISHIBA IF HE RUNS AGAIN FOR LDP HEAD" - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 147.00($1.06b), 146.85($751m).Upcoming Close Strikes : 149.00($1.15b Aug 14) - BBG.
• CFTC data shows asset managers reduced their JPY longs +60532( Last +75119), leveraged funds slightly reduced their newly built short JPY position -29308(Last -31280).

Fig 1 : USD/JPY Spot 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

The AUD/USD has had a range of 0.6517 - 0.6532 in the Asia- Pac session, it is currently trading around 0.6530, +0.02%. US equities roared higher as the market gets ready for more rate cuts, the slight reprieve for the USD going into the print was quickly reversed. The more cuts being priced in increases the pressure on an already bearish USD market. I felt the bounce back towards 0.6550 offered a good risk/reward to fade initially but if the US starts pricing in more aggressive cuts can the AUD ignore it? The Price remains firmly in the 0.6350-0.6650 range, if the USD extends lower can it test the top end?

• MNI AUSTRALIA: Consensus Expects Some Normalisation In July Labour Data. With May and June employment gains disappointing, the July data will be monitored closely for signs that the labour market has turned. Q2 employment averaged 28.8k/month up from Q1’s 1.4k but slightly lower than Q2 2024’s 32.2k. Bloomberg consensus expects a 25k gain in July after June’s +2k, slightly below the Q2 average. The unemployment rate is forecast to decline 0.1pp to 4.2%, returning to the Q2 average.
• MNI AU DATA: Public Pay Growth Outpacing Private Sector. The Q2 WPI rose 0.8% q/q leaving annual inflation at 3.4% y/y after a recent trough at 3.2% in Q4 2024 and 4.1% in Q2 2024. Public sector quarterly wage gains outpaced the private sector for the third consecutive quarter at 1.0% q/q compared with 0.8%. Public wage growth is now up 0.1pp to 3.7% y/y, while private was 3.4% y/y. The RBA had forecast 3.3% for Q2 and in its August projections is expecting the WPI to trend lower to around 3% by Q2 2026. 2025 to date is showing some stabilisation in wage inflation.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6575(AUD746m), 0.6550(AUD597m). Upcoming Close Strikes : 0.6600(AUD1.25b Aug 14), 0.6690(AUD583m Aug 14), 0.6523(AUD562m Aug15) - BBG
• AUD/JPY - Asia-Pac range 96.40 - 96.70, Asia is trading around 96.70. The pair has bounced and is testing its first resistance around the 96.50/97.00 area. There should be sellers around here initially, but a break above 97.50 though would negate this and reinstate the momentum higher.

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P