KRW: Won Lags USD Index Losses, Taiwan Lifers Reportedly Selling KRW NDFs
May-13 23:43
The won saw decent volatility through Tuesday trade, from sub 1410 we got to close to 1429 late in Asia Pac trade. We mostly tracked lower through the US session, ending at 1415.8, for a won gain of 0.18%. This lagged broader USD softness, with the BBDXY and DXY indices off more than 0.70%, as USD unwound some of Monday's gains (with the lower than expected US CPI outcome aiding the move).
- For spot USD/KRW, we remain close to the 200-day EMA (near 1414), but this doesn't appear to be a strong pivot point at this stage. The highest EMA resistance point is the 50-day, near 1435. On the downside, support has been evident on moves sub 1400 recently.
- BBG reported late yesterday that Taiwan lifers were sellers of KRW in the NDF space, which also helped push spot USD/KRW higher (see this link). This is a little at odds over what might have been expected, with KRW NDF hedging costs lower recently compared to those in the TWD space. Still, with spot USD/TWD stabilizing recently, lifers may have been reducing proxy hedges in the USD/KRW NDF space.
- On the data front, we had the unemployment rate print at 2.7% versus 3.0% forecast and 2.9% prior. Jobs growth was close to unchanged at +194k in y/y terms. Later on we have bank lending to households, a BOK watch point from a financial stability perspective.
- In the equity space, to recap the Kospi was little changed yesterday, while offshore investors added $150.8mn to local shares. The offshore lead in the tech space was positive from US markets on Tuesday.
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JPY: USD/JPY - Move Lower Gaining Momentum
Apr-13 23:27
The range was 142.07 - 144.20 on Friday night, Asia is drifting off the highs in early trading back to 143.75. USD/JPY finally found some buyers on Friday night putting in a low near 142.00 as some risk was prudently pared going into the weekend. The USD has been routed across the board and the JPY continues to be a favourite long to express that against.
- There had been some speculation that the BOJ had been a seller of treasuries adding to the messy price action. The LDP policy chief has come out saying its US treasury holdings will not be used as leverage in tariff talks scheduled for April 17.
- The big news over the weekend was President Trump's exemptions on smartphones, computers and other electronics, though this has been downplayed over the weekend as a procedural step and they will be looking at the whole electronic supply chain.
- The price action in USD/JPY in particular shows how the perception of the US is changing and the belief in its exceptionalism is being challenged. If this view pervades, expect the move lower in the USD to intensify.
- USD/JPY traded most of last week in free fall, expect sellers to reemerge between 145.00/146.50 if given the opportunity.
- Watching the long term pivotal area around 140.00 a break would open up a bigger move back to 125/130 from a longer term technical standpoint.
- CFTC data show Asset managers aggressively adding to JPY longs while leveraged funds are only just turning long.
- Data : Industrial Production.
Fig 1: USD/JPY CFTC Positioning
Source: CFTC/MNI - Market News/Bloomberg
ASIA: Coming Up in Asia Today (UPDATED)
Apr-13 23:10
| 2300GMT | 0800HKT | 1000AEDT | Singapore GDP SA QoQ 1Q A |
| 2300GMT | 0800HKT | 1000AEDT | Singapore GDP YoY 1QA |
| 0100GMT | 1000HKT | 1200AEDT | China Exports YoY MAR |
| 0100GMT | 1000HKT | 1200AEDT | China Imports YoY MAR |
| 0100GMT | 1000HKT | 1200AEDT | China Trade Balance MAR |
| 0100GMT | 1000HKT | 1200AEDT | China Exports YoY MAR CNY |
| 1300GMT | 0000HKT | 1200AEDT | China Imports YoY MAR CNY |
| 1300GMT | 0000HKT | 1200AEDT | China Trade Balance MAR CNY |
| 1300GMT | 0000HKT | 1300AEDT | Indonesia Foreign Reserves MAR |
BONDS: NZGBS: Sharply Cheaper With US Tsys, Electronic Tariff Pause In Focus
Apr-13 23:10
In local morning trade, NZGBs are 6-11bps cheaper after another heavy session for US tsys on Friday.
- US 10-year futures (TYM5) are dealing at 109-26, +0-03 from closing levels in today's Asia-Pac session.
- The big news over the weekend was President Trump's exemptions on smartphones, computers, and other electronics, though this has been downplayed over the weekend as a procedural step. They will be looking at the whole electronic supply chain.
- On Friday, the US 10-year yield ranged from 4.5270% to 4.5860%, closing around 4.49%. The 10-year yield rose almost 50bps in 5 days, one of the biggest moves over that number of days going back to 1998.
- Several catalysts are being pointed at: hedge funds, basis - traders being squeezed out, and sovereign selling of treasuries as a negotiation tool. These have all added to the pressure.
- NZ retail card spending fell 0.8% m/m in March. Total card spending fell 1.5% m/m versus a revised -0.1% in February.
- NZ net migration estimates rose to +5,430 in February from a revised +2,370 in January. Annual Net Immigration Rose to 32,922 in February.
- Swap rates are
- RBNZ dated OIS pricing is 3-7bps firmer across meetings. 30ps of easing is priced for May, with a cumulative 77bps by November 2025.
