KRW: Won Outperforms, Aided By Tech Equity Surge, Local Markets Closed Today
Jun-05 22:47
1 month USD/KRW finished the Wednesday US session at 1367.6. This was a won gain of 0.30%, outperforming a slight rise in the DXY and a close to unchanged BBDXY index. Note spot won finished up just under 1373 yesterday.
- 1 month USD/KRW upticks above 1370 were faded post the Asia close on Wednesday, although we couldn't test earlier lows sub 1366. The 20-day EMA is very close to these levels (1365.6). Further south is the 50-day EMA, near 1360.5.
- Supporting won sentiment was surging tech related shares, the SOX rose just over 4.5% (as Nvidia rose above $3trln market value). the MSCI IT index gained over 2.5% as well.
- The US real yield fell back sub 2%, fresh lows since early April. US data was mixed with the ADP report weaker, but ISM services painting a more resilient growth outlook compared to recent survey measures.
- To recap, the Kospi rose just over 1% yesterday, while offshore investors added $469.5mn to local shares.
- Note local markets are closed today for Memorial day.
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AUD: A$ Outperforms As Equities Rally, RBA Decision & Forecasts Later
May-06 22:35
Aussie and NOK were the best performers in the G10 on Monday. AUDUSD rose 0.2% to 0.6624 supported by stronger equities and probably also today’s RBA meeting. While it is widely expected to keep rates unchanged, it is likely to acknowledge that disinflation has slowed. The USD index was flat.
- AUDUSD rose to a high of 0.6638 yesterday but is still below initial resistance at 0.6647, May 3 high. The bullish trend that started April 19 has resumed. The bear trigger is at 0.6363.
- AUDJPY rose 0.8% to 101.95, close to the intraday high of 102.05. AUDNZD is 0.25% higher at 1.1024. AUDEUR is 0.2% higher at 0.6150 and AUDGBP +0.1% at 0.5273.
- Equities rallied with the S&P up 1% and the Euro stoxx +0.7%. Oil prices are higher with WTI up 0.9% to $78.84/bbl. Copper rose 1.1% and iron ore is $119-120/t.
- Today the RBA decision is announced and updated staff forecasts are released with the Statement on Monetary Policy (see MNI RBA preview here). Q1 real retail sales are also released.
CNH: USD/CNH Holds Monday Rebound, Wedged Between 100 & 200-day EMAs
May-06 22:15
USD/CNH found selling interest above 7.2200 on Monday's session, while dips post the Asia close to 7.2000 were supported. We track near 7.2140 in early Tuesday dealing, having lost 0.30% in Monday trade. USD/CNY finished up near 7.2100, well off recent highs above 7.2400. A gain in CNY terms of 0.45%.
- USD/CNY's slump reflected catch up to USD weakness as onshore markets returned for the first time yesterday since last Tuesday. BBG noted that USD dip buying was quite strong though, with state owned banks reportedly selling USDs at various stages of yesterday's session to balance the market.
- USD/CNH is comfortably above post US NFP lows from Friday (7.1653), the pair wedged between the 200-day EMA (7.1990) and the 100-day EMA (7.2244).
- The local data calendar just has April FX reserves on tap, which will likely print towards the end of the local session. On Thursday April trade figures are due.
- In US trade the Golden Dragon index was down slightly. This followed a positive tone from onshore equities as markets returned (the CSI 300 up 1.48%).
- Also note Shenzhen has eased house buying restrictions (see this BBG link for more details).
US TSYS: Tsys futures Steady, Projected Rate Cut Pricing Starting To Recede
May-06 22:09
- Treasury futures did very little on Monday, ranges were tight and volumes were low with Japan and London out for Spring holiday. The 10Y contract made highs of 109-01+ and lows of 108-23 finishing the session at 108-27+, we have ticked slightly higher post the close now trading at 108-29.
- Treasuries have rallied following today’s NFP release. The move higher strengthens a bullish S/T set-up and signals potential for an extension of the correction Initial resistance is 109-09/09+ (50-day EMA/ May 3 high), while to the downside, initial support is at 108-12 (20-day EMA).
- Cash Treasury curve bull-flattened again on Monday, yields were 1.5bps higher to 3bps lower, with the 2Y yield unchanged at 4.831%, 10Y -2bps to 4.487%, while the 2y10y -3.477 at -34.730
- Projected rate cut pricing looks steady to mildly cooler vs. this morning's levels: June 2024 steady at -10% w/ cumulative rate cut -2.5bp at 5.298%, July'24 at -24% w/ cumulative at -8.5bp at 5.238%, Sep'24 cumulative -20.7bp (-22.8bp earlier), Nov'24 cumulative -30.3bp (-32.8bp earlier). Dec'24 cumulative currently -43.7bp (-47.7bp earlier).
- Looking Ahead: Little on the data calendar for the week, focus will turn to Fed speakers with MN Fed Kashkari at 1130ET.
