ASIA FX: USD/TWD Firms Again, USD/KRW Finds Selling Interest Near 1400

NZGBs closed showing a twist-flattener, with benchmark yields 1bp higher to 2bps lower. 

• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest rally.
• Today’s focus has been on the US-JN trade deal. Japan will pay a 15% reciprocal tariff to US Trump notes. This is lower than the 25% rate which had been threatened.
• (Bloomberg) -- RBNZ publishes new residential mortgage lending data for June, on its website. Lending to all borrowers NZ$8.26b, Gains 47% y/y, Increases 3.5% m/m after seasonal adjustment: RBNZ.
• Satish Ranchhod(Westpac) on LinkedIn: "Inflation in New Zealand has picked up to 2.7%, and it's on course to rise back up to around 3% by the end of this year, it's a mixed picture under the surface.”
• Swap rates closed flat to 2bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed little changed across meetings. 21bps of easing is priced for August, with a cumulative 37bps by November 2025.
• Tomorrow, the local calendar will see a speech from the RBNZ's Conway on tariffs and the economy.
• Tomorrow, the NZ Treasury plans to sell NZ$225mn of the 3.0% Apr-29 bond, NZ$175mn of the 2.75% Apr-37 bond and NZ$50mn of the 5.0% May-54 bond.

The BBDXY has had a range of 1195.19 - 1197.06 in the Asia-Pac session, it is currently trading around 1196, +0.05%.  The USD again fell very easily overnight, aided by the move lower in US yields. The market is much more comfortable selling USD’s, while below 1220 rallies should continue to find supply. What stands out overnight though is the USD could not move higher while the risk of Powell being removed hung over its head, last night both Trump and Bessent pulled back from that scenario and intimated Powell would complete his term. US yields have moved lower as a result taking the USD with it, does that mean the USD now goes down in all scenarios ?

• EUR/USD -  Asian range 1.1731 - 1.1749, Asia is currently trading 1.1735. The pair bounced off its first support around the 1.1600 area. The price still looks a little stretched in the short term, first support around 1.1550/1600 then more importantly the 1.1450 area.
• GBP/USD - Asian range 1.3517 - 1.3535, Asia is currently dealing around 1.3525. The support around 1.3350/1.3400 has proved to be solid first up. Bounces back towards 1.3500/1.3550 should now see offers initially. While the support holds the market will be encouraged to continue to play from the long side.
• USD/CNH - Asian range 7.1592 - 7.1727, the USD/CNY fix printed 7.1414, Asia is currently dealing around 7.1600. Sellers should be around on bounces while price holds below the 7.2000 area and the PBOC manages the fix lower. Above 7.2000 and we could see a test of the USD Shorts.
• Cross asset : SPX +0.25%, Gold $3423, US 10-Year 4.364%, BBDXY 1206, Crude oil $65.54
• Data/Events : EZ Consumer Confidence

Fig 1: GBP/USD Spot Daily Chart

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

The NZD/USD had a range of 0.5985 - 0.6014 in the Asia-Pac session, going into the London open trading around 0.6015, +0.20%. The pair had a decent move higher in the New York session as the USD came back under pressure with US yields pushing lower. Depending what your view is this 0.6020/0.6050 area looks an attractive fade, the danger though is the USD which is looking sickly once more and should it capitulate the NZD could build momentum higher again. Price will need a sustained break back above the 0.6025/50 area to signal a potential base might be in place. 

• Satish Ranchhod(Westpac) on LinkedIn: “Inflation in New Zealand has picked up to 2.7%, and it’s on course to rise back up to around 3% by the end of this year, it’s a mixed picture under the surface. With softness in demand, we are seeing lower inflation in parts of the domestic economy, especially the housing sector. However, we’re continuing to see large increases in administered prices like council rates and electricity charges. At the same time, import prices are starting to push higher again. We continue to expect another 25bp cut from the RBNZ in August. However, with headline inflation pushing higher, the RBNZ will be cautious about the extent and timing of any further rate cuts.”.
• (Bloomberg) -- RBNZ publishes new residential mortgage lending data for June, on its website. Lending to all borrowers NZ$8.26b, Gains 47% y/y, Increases 3.5% m/m after seasonal adjustment: RBNZ.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6010(NZD302m July 24). - BBG
• CFTC Data shows Asset Managers slightly reduced their newly built longs in NZD +8192, the Leveraged community has continued to reduce their shorts last week -6744.
• AUD/NZD range for the session has been 1.0915 - 1.0940, currently trading 1.0920. The cross moved higher in response to the NZ CPI. Dips back to 1.0850/1.0900 should continue to find support as the pair tries to build momentum to move higher. 

Fig 1: NZD/USD Spot 120min Chart

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