JPY: USD/JPY - Consolidates Around 155.00
The USD/JPY range today has been 154.92 - 155.23 in the Asia-Pac session, it is currently trading around 155.15, +0.05%. The pair has consolidated around the 155.00 area in a quiet session. The market is pricing in the fact that the Yen move looks like it could force the BOJ into action in December. This has stalled the upward momentum and should keep it contained in the short-term but I suspect the market will still look for opportunities to express a long USD at the right levels. Technically USD/JPY is still in an uptrend with the first big support back toward the 153-155 area which should see buyers reemerge. In today's Asian session I suspect we will continue to consolidate within a wider 154.50-156.00 range.
- Some key inflation data out of the US tonight should be the driver of price, the market will be focused on PCE tonight after mixed jobs data over the course of the week.
- Bloomberg - “Japan household spending unexpectedly fell 3% in October from a year earlier, a sign of fragile domestic demand as the BOJ prepares to consider raising rates.”
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.94b), 157.00($895m). Upcoming Close Strikes : 155.00($1.22b Dec 8 ), 156.00($1.49b Dec 8 ), 156.00($740m Dec 10) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 88 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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BONDS: NZGBS: Richer But NZ-US10Y Diff Wider
NZGBs closed 2-3bps richer, but with the NZ-US 10-year yield differential 2bps wider at +2bps. (see chart)
- NZ's jobless rate held steady at 5.3% in the third quarter, matching economist expectations. Employment was unchanged quarter-on-quarter, compared with a revised 0.2% fall in the previous quarter, while employment declined 0.6% year-on-year, a smaller drop than in the second quarter. The labour force participation rate was 70.3%.
- Average hourly earnings rose 0.7% from the previous quarter, and non-government wages increased 0.4% including overtime and 0.5% for ordinary time.
- Swap rates are 2-3bps lower, with the 2-year rate rejecting off the 20-day EMA.
- RBNZ dated OIS pricing is slightly softer across meetings. 26bps of easing is priced for November, with a cumulative 33bps by February 2026.
- Tomorrow, the local calendar will see the RBNZ at the Select Committee to discuss the FinStab Report, and the Government will release its 3-Month Financial Statements.
- Also tomorrow, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.50% May-35 bond and NZ$50mn of the 5.00% May-54 bond.
Bloomberg Finance LP
JGBS AUCTION: Poor To Mixed Demand Metrics For 10Y Auction
The 10-year JGB auction delivered weak to mixed results, with the low price failing to meet expectations at 100.34, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 2.9734x from 3.3356x. However, the tail shortened to 0.13 from 0.19.
- This performance came with an outright yield around the same level as last month and approximately 5bps below the cyclical high of 1.705% set last month.
- The 2s/10s and 7s/10s yield curves were also around similar levels as last month.
- Last month’s 10-year JGB auction delivered weak results, with the low price failing to meet expectations at 100.49, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.3356x from 3.9156x, and the tail lengthened to 0.19 from 0.06.
- In early afternoon Tokyo trading, the cash 10-year and JGB futures are dealing slightly weaker.
JGBS AUCTION: 10-Year JGB Auction Results
The Japanese Ministry of Finance (MoF) sells Y 2,064.5bn 10-Year JGBs:
- Average Yield: 1.658% (prev. 1.635%)
- Average Price: 100.35 (prev. 100.55)
- High Yield: 1.674% (prev. 1.657%)
- Low price: 100.22 (prev. 100.36)
- % Allotted At High Yield: 67.9818% (prev. 9.1993%)
- Bid/Cover: 2.9734x (prev. 3.3356x)
