PHP: USD/PHP Still Close To Record Highs,No Q4 PHP Rise, BSP Seen Cutting Later

The NZD/USD had a range today of 0.5636 - 0.5651 in the Asia-Pac session, going into the London open trading around 0.5645, -0.05%. The NZD continues to trade heavy but I continue to be a little wary of positioning in the NZD though as the market is small and traders tend to very quickly become all positioned the same way. The NZD does stand out as a vehicle to express a short in but should this bout of improved risk sentiment grow it will be tough for the NZD to ignore it and it could play catch up to the move at some point, if you feel this bounce in risk will fail and move back lower then the NZD remains a great way to express that. I still suspect any decent bounce will again attract sellers though. The first sell area on a pullback would be around 0.5750 and then the more pivotal 0.5850 area.

• The AU-NZ 10-year yield differential stands at +30bps, its widest since October 2020.
• MNI AU - Inflation Expectations Stable, RBNZ On Track For November Cut. The RBNZ’s Q4 survey of expectations posted unchanged inflation expectations. The central bank is likely to be relieved that not only are they within its 1-3% target band but they didn’t increase in the latest reading following the rise in Q3 CPI to 3.0% y/y from 2.7%, although the RBNZ’s measure of core held steady at 2.7%. The RBNZ has maintained for some time that the Q3 increase would be temporary and its August projections showed inflation moderating from Q4 and approaching the band midpoint in 2026 given the degree of spare capacity in the economy.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5380(NZD460m Nov 13), 0.5600(NZD538m Nov12), 0.5800(NZD461m Nov 12) - BBG

Fig 1: NZD/USD Spot Daily Chart

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

The USD/JPY range today has been 154.02 - 154.49 in the Asia-Pac session, it is currently trading around 154.30, +0.10%. The pair extended higher in our session as it consolidated its recent gains above the 154.00 area. USD/JPY found solid demand around the 153.00 area last week and this return of positive sentiment has brought the focus back to the 154-155 resistance area. A sustained break above here is needed to potentially see the uptrend regain upward momentum, through here the focus would then turn toward the 160 area where I would start to become wary of intervention risks. If the pair is to move higher the dips towards 153.70/1.5400 should be supported on the day.

• MNI AU - Current A/C Surplus Surges On Income Inflows, But May Not Aid Yen: Japan Sep trade and current account balance data were stronger than forecast, particularly on the current account side. In unadjusted terms we printed 4483.3bn, versus 2456.6bn projected and 3701.4bn prior. In seasonally adjust terms we were at 4347.6bn for the current account, close to double the consensus projection and prior outcome. This is the best outcome for at least a few decades. This isn't necessarily a yen positive though, at least based off recent correlations. Current account shifts haven't coincided with yen shifts in recent years.
• The 30-year JGB auction delivered weak results. Today's result is consistent with this month's 10-year auction, which also demonstrated weak demand metrics
• Options : Close significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : none - BBG.

Fig 1 : USD/JPY Spot Weekly Chart

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

The AUD/USD has had a range today of 0.6526 - 0.6539 in the Asia- Pac session, it is currently trading around 0.6530, -0.10%. The AUD/USD has drifted a little lower in our session as it consolidates above 0.6500. Is that the end of the correction ? Does the end of the shutdown override all the concerns that seemed to be weighing on the market last week, time will tell. The AUD will be one of the main beneficiaries while this positive sentiment dominates proceedings. The AUD/USD is probing the pivot around the 0.6550 area, a sustained push above here and the focus will turn back toward the 0.6650/0.6700 year highs. Look for intra-day support toward the 0.6500/0.6515 area first up.

• MNI AU - NAB Survey Signals Ongoing Recovery & Lower Inflation. NAB business confidence and conditions were little changed in October with the former down 1 point to +6 and the latter up 1 point to +9. The survey details were generally positive though with forward orders positive and their highest in two and a half years, investment up, labour demand steady and cost/price increases moderating. It is consistent with an ongoing economic recovery and contains inflation and therefore the RBA on hold.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6350(AUD396m), 0.6450(AUD 644m), 0.6650(AUD391m). Upcoming Close Strikes : 0.6500(AUD1.22b Nov 12), 0.6750(AUD2.17b Nov 14)- BBG

Fig 1: AUD/USD spot Daily Chart

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