US TSYS: Weakness in Equities Helps Stabilise, CPI Spectre Looms Large
Tsys have recovered from session cheaps alongside the downtick in wider equity markets, with the major cash benchmarks now running 2.5bp cheaper to 1bp firmer across the curve, pivoting around 7s as the early twist flattening impulse holds. TY futures sit at unchanged levels, operating within a still contained 0-06 range. Early London flow has been dominated via selling of downside exposure and purchasing of upside exposure in FV options. Participants remain squarely focused on the monthly CPI release that will cross in NY hours.
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US TSYS: Early Richening Holds In Asia
TYM3 deals at 115-27, +0-01+, with a narrow 0-04+ range observed on volume of ~49k.
- Cash tsys sit ~3bps richer across the major benchmarks.
- Asia-Pac participants faded Friday's post-NFP cheapening, perhaps focusing on the lower than expected average hourly earnings.
- The latest Sino-Taiwan tensions, as China simulated precision strikes on Taiwan during military drills over the weekend, also added a layer of support.
- The early richening held for the remainder of the session as tsys traded in narrow ranges with little follow through on moves.
- Fed dated OIS price ~18bp hike into the May meeting with the terminal rate at 5%. There are now ~70bps of cuts in 2023.
- There is a thin data calendar in Europe today, further out US Wholesale Inventories and Fedspeak from NY Fed President Williams provide the highlight on Monday.
NZD: Marginally Pressured In Light Holiday Trade
NZD/USD prints at $0.6240/45, ~0.1% softer today.
- The pair has fallen below its 20-Day EMA in light holiday volumes, a narrow 20 pip range has been observed thus far.
- AUD/NZD is little changed, the cross has held below the $1.07 handle after breaking below last week.
- The domestic markets remain closed for the remainder of the session. Wider swings in risk sentiment will be the main driver in NZD.
AUD: A$ Lower In Light Trade But Range Trading
The AUDUSD is down 0.2% to 0.6660 in light trading. It reached a low of 0.6656 before a high of 0.6682. The USD index is up slightly in APAC trading so far.
- In terms of the major crosses, Aussie is up 0.2% against the yen to 88.31 and +0.1% versus the kiwi to 1.068. AUDEUR is down 0.1% to 0.6111 and AUDGBP flat at 0.5365.
- Australia, NZ and HK are closed today but the Nikkei is up 0.4%, the KOSPI +1% and the CSI +0.2% higher. WTI is trading sideways and is around $80.70/bbl. Copper prices are down 0.1% and iron ore is just below $118/t.
- On Tuesday, Westpac’s April consumer confidence data and the March NAB business survey are released. They’re both likely to be watched closely given the RBA’s increased data dependence.
