JPY: USD/JPY - South Korea Joins The Fight against One-Sided USD Moves

NZGB yields have done very little to start the week. The 2yr was last near 2.58%, having around a 1bps range so far today, while the 10yr was at 4.15%, unchanged from end Friday levels and also with a tight range trade for Monday's session. With Japan markets out today, these has been no US Tsy trading (with US Tsy futures little changed). Focus in NZ is firmly on Wednesday's RBNZ decision. A 25bps cut is widely expected, with focus on the outlook and risks of cuts into 2026 (which can't be ruled out in our view). 

• Via BBG, the NZ Treasury noted in its fortnightly economic update: New Zealand’s economy has yet to see broad-based momentum across sectors even as economic indicators improve." 
• The NZ 2yr swap rate (NDSO2) has edged down a touch, but remains above 2.40% at this stage. The NZGB 2/10s curve is little changed at +157bps. 

• The local data calendar is quiet until Wednesday's RBNZ decision.

   

The AUD/USD has had a range today of 0.6449 - 0.6470 in the Asia- Pac session, it is currently trading around 0.6465, +0.15%. The AUD/USD has drifted a little higher in a quiet Asian session. Risk is trying to build on the bounce seen in Crypto over the weekend, I would still be wary though considering the price action we had last week. The pair had a brief look below the 0.6440-0.6460 area on Friday night but could not extend, a sustained break below here is needed to target the 0.6350 area. Given how risk is trading the AUD/USD could perhaps drift a little higher on the day, but for now I would remain skewed toward a seller on rallies, first sell zone 0.6500-0.6530. 

• MNI AU - First Print Of Complete Monthly CPI Out Wednesday: The focus this week will be on Wednesday’s new complete monthly CPI data. A partial basket has been published for a while but the focus remained on the quarterly series as they contained updates for all components. RBA Governor Bullock said that the Board will continue to concentrate on quarterly CPI for now as it assesses the trends in the new monthly CPI and allows time for seasonal factors to emerge for the trimmed mean.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD304m). Upcoming Close Strikes : 0.6450(AUD991m Nov 26), 0.6500(AUD1.07b Nov 26), 0.6535(AUD1.69b Nov 26) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 46 Points

Fig 1: AUD/USD spot Daily Chart

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

Net equity outflows for Asia last Friday were dominated by South Korea and Taiwan net selling. The net selling from Taiwan of nearly $3bn was the largest single daily outflow since Sep last year. For South Korea, it was the largest daily outflow since 2021. The sharp reversal in tech equity sentiment after the Nvidia results last week has cast a shadow over the tech/AI related equity market outlook. Equity market sentiment is better for both South Korea and Taiwan so far today, but gains are less than 1%. Both markets are still close to recent lows. For Taiwan, in the past trading month, offshore investors have sold just over $12bn in local stocks. We may be getting closer to a trough from a momentum standpoint but it remains to be seen if we can see a positive catalyst that brings positive inflow momentum in the near term. South Korea is seeing positive inflows today, but only to the tune of +$30mn

• Elsewhere, Indian inflow momentum mostly remained positive, although the 5-day sum is only marginally above flat. The NIFTY is pushing higher, last above 26100, while INR FX has fallen through 89.00 to be at fresh lows versus the USD.
• In South East Asia, outflow pressures mostly continue. Thailand and Malaysia were dominant last week in terms of net selling, while positive inflow momentum for Indonesia slowed. 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI