FOREX: USD/JPY Eyeing Upside 153 Test, USD/CAD Above 1.4000 On Trump Headlines
The USD BBDXY index remains close to this week's highs, last 1213.90, up around 0.1% so far today. The clear focus later will be on the US CPI print. Yen weakness remains a dominant trend, with the edge up in the USD/CNY fix, coupled with muted comments on FX from Japan government officials, driving an earlier run up towards 153.00 (highs were 152.92). The 153.27 level, the Oct 10 high and bull trigger, isn't too far away. Yen is now off this week by 1.5%, the weakest performer in the G10 space. Elsewhere, USD/CAD has pushed up above 1.4000, as US President Trump stated all trade negotiations with Canada would cease. AUD/USD is back to 0.6500, but NZD is outperforming marginally, holding close to 0.5750. Both currencies remain with recent ranges.
- Earlier remarks from Japan's Economic and Fiscal Policy Minister Minoru Kiuchi suggested little concern around weaker FX trends (at least at face value). He stated that FX rates are determined by various factors, but refrained from broader comments on FX, which appears to reflect less concern around FX weakness than previous ministers under the Ishiba regime (previous FinMin Kato recently stated that it was important that the yen moved stably and in line with fundamentals and that they were seeing rapid FX moves in the weak yen direction).
- Earlier data from Japan showed a slight softening in the services CPI for Sep, which should reinforce the BoJ's wait and see approach at next week's policy meeting (Thursday), while the Oct preliminary Oct PMI fell further into contraction, implying downside risks for IP growth.
- USD/CAD spiked from 1.3990 to highs of 1.4028, but we sit back at 1.4010/15 in latest dealings, as Trump headlines crossed. We were close to 1.3990 before the headlines crossed (we remain above all key EMAs, the 20-day EMA is near 1.3980/85, while recent highs rest at 1.4080). US President Trump posted via Truth Social that all trade negotiations with Canada are now terminated. He stated Canada falsely used an ad featuring former President Ronald Reagan speaking negatively about tariffs.
- Out of the US CPI later, we get the preliminary PMIs for Oct for the UK, EU and US.
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FOREX: Asia FX Wrap - The BBDXY Consolidates Just Below 1200
The BBDXY has had a range of 1195.57 - 1197.02 in the Asia-Pac session; it is currently trading around 1196, +0.10%. The USD has stalled just above 1200 and consolidated in a quiet session overnight. The market is clearly more comfortable selling USD’s but for the moment it lacks any real impetus. Should the market stay below 1200 then the focus will again turn back to the pivotal support back towards the 1180 area, a move back above 1200 might signal a deeper pullback. Bloomberg - “Chinese state-owned banks are selling the yuan in the spot market and offsetting their trades with swaps, putting the brakes on a recent rise in the currency.”
- EUR/USD - Asian range 1.1795 - 1.1819, Asia is currently trading 1.1800. The pair found some demand back towards 1.1700 and is looking to regain momentum higher.
- GBP/USD - Asian range 1.3506 - 1.3528, Asia is currently dealing around 1.3510. The pair rejected the break higher and has moved back into the middle of its recent range. No clear direction for the moment as it consolidates around 1.3500.
- USD/CNH - Asian range 7.1122 - 7.1210, the USD/CNY fix printed 7.1077, Asia is currently dealing around 7.1190. The pair has found demand towards the 7.1000 area and is looking to potentially revert back to the mean. Sellers should be around on bounces while price holds below the 7.2000/2200 area and the PBOC manages the fix lower. A move above 7.2500 is needed to see a test of the USD Shorts.
- Cross asset : SPX +0.05%, Gold $3767, US 10-Year 4.108%, BBDXY 1196, Crude Oil $63.55
- Data/Events : Germany IFO Business Climate, Spain PPI
Fig 1: BBDXY Spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
NZD: Asia Wrap - NZD/USD Consolidates Around 0.5850
The NZD/USD had a range of 0.5850 - 0.5866 in the Asia-Pac session, going into the London open trading around 0.5860, +0.05%. The NZD has traded sideways in our session, still holding above recent support around 0.5850. The initial move lower seems to be stalling for now but I suspect sellers would remerge should the Kiwi bounce back towards the 0.5925/50 area. The 0.5800 is important support, I suspect we will see buyers towards this area initially but a sustained break through there would turn the focus back towards the 0.5500 lows.
- Bloomberg - “New Zealand Names Sweden’s Breman as First Female RBNZ Governor. New Zealand named Anna Breman as the new Reserve Bank governor almost seven months after the unexpected departure of Adrian Orr. Breman, who is currently First Deputy Governor of Sweden’s Riksbank, will start a five-year term on Dec. 1.”
- "BREMAN: RBNZ WILL STRIVE FOR TRANSPARENCY, FULL ACCOUNTABILITY, WON'T GET STRONG GROWTH WITHOUT LOW, STABLE INFLATION. FULLY CONFIDENT THAT THE RBNZ IS INDEPENDENT" - BBG
- “NZ'S WILLIS: NO INTENTION TO CHANGE RBNZ'S INFLATION TARGET” - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5900(NZD372m), 0.5890(NZD350m). Upcoming Close Strikes : none - BBG
- CFTC Data of last week shows Asset Managers beginning to rebuild their short positions in the NZD, -11933(Last -3121). The Leveraged community is doing the same as it looks to rebuild its own shorts, -5327(Last -1874). Positioning shows the market is again turning bearish on the NZD.
- AUD/NZD range for the session has been 1.1257 - 1.1303, currently trading 1.1295. The Cross has broken above the multiple highs towards the 1.1200 area and is accelerating higher on the back of a hotter AU CPI print today. Dips should now continue to be supported as the market turns its focus towards the 1.1400/1.1500 area.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
BONDS: NZGBS: Modest Bull-Flattener, New RBNZ Gov Announced
NZGBs closed showing a bull-flattener, with benchmark yields flat to 2bps lower.
- The NZ government has appointed Sweden's Anna Breman to be the new RBNZ governor. Breman will start the position on Dec 1 of this year. Current acting RBNZ Governor Hawkseby will remain in the position until then. Note the last RBNZ policy meeting for 2025 will be held on Nov 26, so the first policy meeting that Breman will be part of is the Feb 18 2026 OCR.
- Breman comes from the Swedish Central Bank, Riksbank, where she is currently First Deputy Governor. Anna holds a PhD in Economics and has previously been chief economist and global head of macro research at Swedbank. She has also worked at the Swedish Ministry of Finance, the World Bank and as a researcher in the United States."
- Swap rates closed flat to 2bps lower.
- RBNZ dated OIS pricing closed little changed across meetings. 32bps of easing is priced for October, with a cumulative 59bps by November 2025.
- The local calendar will be empty until Friday's Consumer Confidence data.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond and NZ$200mn of the 3.50% Apr-33 bond.
