JPY: USD/JPY - Well Supported Overnight
May-28 22:53
The overnight range was 144.00 - 145.08, Asia is currently trading around 144.90. USD/JPY stayed well supported all through the overnight session as the USD built on its gains.
- MNI BRIEF: BOJ Posts Unrealised JGB Losses Of JPY28.6 Trln - The Bank of Japan reported unrealised losses of JPY28.6 trillion on its JGB holdings for fiscal 2024, which ended March 31, sharply higher than the JPY9.4 trillion loss recorded the previous year, reflecting the impact of rising interest rates. https://www.mnimarkets.com/articles/mni-brief-boj-posts-unrealised-jgb-losses-of-jpy286-trln-1748418311321
- Japan’s auction of 40-year government bonds was met with very weak demand.
- (Bloomberg) - “The recent rise in long-term JGB yields is pushing up Japan’s debt servicing costs, limiting the Bank of Japan’s tightening capacity which is a headwind for JPY,” wrote Brown Brothers Harriman strategists Win Thin and Elias Haddad. “In the short term, the build-up of stale long JPY positions increases the risk of a sharper short-covering move higher in USD/JPY”.
- There was a definitive demand for USD’s overnight and this kept USD/JPY well supported moving back up to 145.00 before finding some supply.
- The market has been very confident of a move lower in USD/JPY but with positioning quite large now the risk of pullbacks does increase. The market is currently testing the resistance towards the 145.00/146.00 area, there should be sellers once around these levels but a close back above 146.00/50 would signal the retracement could have further to go.
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($1.67b). Upcoming Close Strikes : 143.00($3.39b May 30), 140.00($2.78b May 30).
Data/Event : Japan Offshore Weekly Flows, Consumer Confidence
Fig 1 : BOJ Losses From Bonds
Source: MNI - Market News/Bloomberg
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GOLD: Gold Jumps on Poor US Data
Apr-28 22:45
- Gold climbed into the US open to finish ahead having been lower for most part of the trading day.
- Gold finished higher by +0.73% at US$3,343.98, having been as low as $3,268.23 earlier in the day.
- As the USD continues to soften and bond yields rallied ahead of key US economic data on Wednesday, gold jumped as expectations for weaker data grew.
- Overnights’ data release, the Dallas Fed. Manufacturing Activity, fell to its lowest in 5 years with survey respondents showing executives describing the current situation as "chaos" as supply line disruptions decimate activity.
- This has reduced expectations for Wednesday’s data which sees employment , inflation and growth releases.
- Gold had started the week in the Asian trading session on the back foot, trending downwards before the Texas data which has refocused attention on the possibility that already the trade war may be showing up in US data.
JGB TECHS: (M5) Off Highs, But Underlying Strength Persists
Apr-28 22:45
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.95 - High Apr 7
- PRICE: 140.60 @ 16:37 GMT Apr 28
- SUP 1: 139.38 - 1.0% 10-dma envelope
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs are holding the bulk of the recent strong bullish reversal, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.
NZD: NZDUSD - Consolidating
Apr-28 22:39
The NZD had a range overnight of 0.5928 - 0.5982, Asia is opening around 0.5975.
- “US Treasury Secretary Bessent said “all aspects” of the US government are in contact with Beijing, while reiterating his view that it's up to them to take the first step in de-escalating the trade fight.”(per BBG)
- (Bloomberg) -- New Zealand Finance Minister Nicola Willis gave a pre-budget speech Tuesday in Wellington. Says “Treasury has reduced assumptions for real GDP growth in 2025 and 2026.”
- “New Zealand’s economy will still be growing, but not as fast as forecast a few months ago”
- Says tariff announcements by the US government, countervailing tariffs being imposed by China and an uncertain path for future tariffs and exemptions have created volatile global economic conditions, “with forecasters around the world agreeing that global growth will be lower this year and next year than they were previously predicting”
- Key change is cutting Budget 2025 operating allowance to NZ$1.3b from NZ$2.4b.
- The NZD tried lower initially into London but found good demand back towards the 0.5920 area.
- The price action continues to suggest that dips will probably find demand, first support on the day is 0.5900 then 0.5800/50.
- CFTC data show Asset managers have slowed their pace of buying last week, Leveraged funds though have been using dips to reduce their shorts.
- Data : Filled jobs for March coming up
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
