JPY: Volatile Through Thursday But Finishes Firmer Amid Risk Off, BoJ Rinban Ops Today
Aug-01 21:59
USD/JPY was volatile through Thursday trade, from earlier lows of 148.51 the pair rebounded to 150.89 by early US trade. From there we mostly tracked lower and sit 149.30/35 in early Friday dealings, with yen posting a 0.42% gain for Thursday's session.
- The softer US data, with the weaker ISM manufacturing jobs sub index particularly notable, weighed on US yields across the Tsy benchmarks. The 10yr yield is back sub 4.00%, while the front end 2yr yield fell 11bps to 4.15%, as Fed easing expectations continue to build.
- Yen received another fillip from the weaker global equity backdrop. US and EU shares slumped, with the Nasdaq down 2.3%, as softer US data and tech earnings concerns weighing. On-going Middle East geopolitical concerns was another headwind.
- For USD/JPY techs, the bear cycle remains in play. The 148.54 level, 61.8% of the Dec 28 ‘23 - Jul 3 upleg, has been pierced. A resumption of weakness would open 148.04, the Mar 15 low. Key short-term resistance has been defined at 155.22, the Jul 30 high.
- On the data front, today we have July monetary base data (a non-market mover). BoJ Rinban ops will be eyed though. A Bloomberg survey shows the median forecast for the BOJ policy rate is now at 0.50% for year end, double the expectation compared to the previous survey (see this link).
- In the option expiry space for NY cut later we have the following: Y151.00($871mln), Y151.41($2.0bln), Y153.00($798mln), Y155.00($2.6bln).
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NZD: AUD/NZD Edges Higher, Eyes 1.1000, AU-NZ 2yr Swap At New Highs
Jul-02 21:55
- The AUD/NZD edged slightly higher on Tuesday reaching a new monthly high of 1.0989 before closing up 0.06% at 1.0970.
- The cross is now trading 2.20% higher from recent cycle lows, made on June 6, as a more hawkish RBA and stronger than expected AU inflation data supports the AUD, while falling dairy prices may also cause the NZD to fall.
- Key levels to watch: Initial support lays at 1.0930 (June 28 lows) a break here would open a move to 1.0907 (post cpi low/ June 27 low) below here 1.0850 (pre cpi/ June 26 lows). Resistance is 1.0989 (July 2 high), a break here would open a move to 1.100 (May 13 high)
- The AU-NZ 2yr swap is 2bps higher at -47bps
- Expiries: No strikes today, upcoming strikes include 1.0800 ($600m) 1.0700 ($900m) for July 4th NY cut
- Today, Judo Bank Australia PMI at 9:00, Retail Sales & Building Approvals at 11:30 AEST
NZD: NZD/USD Little Changed, GDT Price Index Plunges
Jul-02 21:52
The NZD/USD was little changed on Tuesday, initially selling off during the Asian session and hit sessions lows of 0.6048, before the USD sold off after Federal Reserve Chair Jerome Powell said recent data points to inflation on a downward path, adding that more evidence is needed before interest rates are reduced
- The NZD/USD finished the session 0.03% higher at 0.6078, paring losses made during the Asian session, as trading gets underway on Wednesday we have opened little changed at 0.6077.
- JOLTS job openings surprisingly increased in May to 8.14m (cons 7.95m) but the data did little to jolt the market with the focus on Friday’s NFP report, while the FOMC minutes will be released later today.
- The average price for whole milk powder fell to $3,218 from $3,394 at the previous auction, according to GDT. The weighted average price for all milk products was $3,782 per ton, with the GDT price index dropping 6.9% the second largest drop on record.
- NZ average residential property asking price rose 0.3% m/m to NZ$861,260 in June, the first increase in four months, while the housing stock remained above 30,000 for the fifth consecutive month, indicating stronger buyer bargaining power. Listings fell 2.4% m/m but rose 26% year-on-year.
- Immediate support is seen at 0.6048 (July 2 lows), with a break potentially targeting 0.6000 area (May 9 lows). Resistance is at 0.6108 (20-day EMA), with a breach opening a move towards 0.6148 (June 20 high).
- The NZ-US 2yr swap is down 3bps to 25bps.
- Expiries: No large nearby strikes Wed. Upcoming notable strikes: 0.6130 (NZD720.7m July 4), 0.6135 (NZD494.5m July 8), 0.6250 (NZD436.8m July 5)
- Looking ahead, ANZ Commodity Price at 11:00 AEST.
AUSSIE 3-YEAR TECHS: (U4) Key Short-Term Resistance Remains Intact
Jul-02 21:45
- RES 3: 96.540 - High Feb 2 and a Key resistance
- RES 2: 96.506 - High Mar 11
- RES 1: 96.300 - High Jun 17
- PRICE: 95.890 @ 16:06 BST Jul 02
- SUP 1: 95.730 - 76.4% retracement of the Jan - Feb rally
- SUP 2: 95.480 - Low Oct 31
- SUP 3: 95.330 - 2.618 proj of the Feb 2 - Feb 14 - Mar 11 price swing
Aussie 3yr futures have faded off the week’s best levels, and posted only a scant recovery having taken out the 96.000 handle on the way lower. Prices need to remain above pre-NFP levels of 96.110 for the rally to hold, before next resistance at 96.210 comes into view. Any bearish reversal would turn focus towards 95.730, a Fibonacci retracement point.
