CHINA: "*XI CITES SUN YAT-SEN’S OPPOSITION TO NATIONAL DIVISION" - BBG

The NZD/USD had a range today of 0.5580-0.5595 in the Asia-Pac session; it is currently trading around 0.5593, +0.10%. Like the AUD it was unable to really build any real momentum below 0.5600 today even with the risk-off back drop. There has been some decent demand toward the 0.5500 area since 2020 and it would take a strong push below there to see the bears look for another sustained leg lower. While below 0.5700-0.5750 the trend still remains lower albeit a little stretched. Initial resistance is toward 0.5610-0.5640 and above there the 0.5700-0.5750 area comes back into play. Can we see another test of the lows or does this inability to move lower suggest a potential reversion back to the mean that would offer better levels ?   

• “The IMF expects global growth to accelerate next year, boosted by AI investment, even as it warned that the world economy is nearing the limits of its resilience in the face of persistent energy squeeze and financial risks.” - BBG
• “Fatal attacks at Saudi airports have intensified pressure on the US to help its ally. A Houthi official warned Washington of a “swift and painful response” if it enters the Yemen conflict, AFP reported.” - BBG 
• CFTC Data up to 06/10/2026 shows Asset Managers are quickly rebuilding their core shorts, -32 534(Last -21 228). The Leveraged community remains sidelined after being squeezed out of its shorts, -1 214(Last -1 454) and are not being so quick to jump back in.
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.5760(NZD386m), 0.5775(NZD382m). Upcoming Close Strikes : 0.5565(NZD350m Oct 15), 0.5790(NZD466m Oct 15) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 38 Points

Fig 1: NZD/USD Spot Daily Chart

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

The USD/JPY range today has been 158.19-158.69 in the Asia-Pac session, it is currently trading around 158.30, -0.18%. The pair topped out toward 159.00 and has drifted back toward the 158.00 level ahead of Ueda’s appearance in parliament, can he provide a reprieve to the Yen bulls. The leveraged market is looking to rebuild Yen shorts after the BOJ dropped the ball, though Asset managers seem content that the long Yen trade can still develop. The overall positioning though looks to have been drastically reduced as the market was recently chopped up. The 159.00-160.50 area technically looks quite important now and I suspect the BOJ/MOJ will be doing what they can to keep it below there. The first support is toward 157.00-157.50 which continues to provide support and then the 155.00 area. Can the BOJ/MOF stop a move back toward 160 and above, for now the Choppy 152-160 range looks set to continue.

• MNI - Japan Sep PPI Well Below Forecasts, Agriculture Falls, Import Prices Dip: The Japan Sep PPI was well below expectations, falling 0.3%m/m, versus a +0.5% forecast. In y/y terms we printed 6.8%, versus 7.6% forecast, which was also the prior outcome. Note the Tokyo Sep CPI rose 2.7%y/y, from 1.9% in Aug, so the risks are skewed to some upside CPI nationwide momentum when that print is out (due on Oct 23). Not long after that we get the Oct BoJ meeting outcome (Oct 29-3). A hike is seen as low risk (less than 10% priced for a 25bps move per OIS markets), but the central bank will update its inflation and growth projections.
• (Bloomberg) - “BOJ Governor Kazuo Ueda’s appearance in parliament later today could offer a potential catalyst. He is likely to defend the case for a quicker pace of interest-rate increases, lending support to the yen” 
• Options : Close significant option expiries for NY cut, based on DTCC data: 154.00($650m), 156.50($560m), 158.00($683m). Upcoming Close Strikes : 155.00($1.61b Oct 14), 156.00($1.39b Oct 15), 156.00($2.05b Oct 16) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 77 Points

Fig 1 : USD/JPY Spot Daily Chart

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

The AUD/USD has had a range today of 0.6950-0.6962 in the Asia- Pac session, it is currently trading around 0.6960. The pair initially traded with an offered tone as Risk came under pressure when AI chipmakers got heavily sold. The market, though outside of some Asian indexes heavily weighted with those stocks has had quite the turnaround, Crypto looked in real trouble at one point but has had a strong bounce off its intra-day lows. The US dollar has also been unable to benefit from this back-drop as the market adjusts positioning for the US CPI coming up. The AUD continues to struggle to gather any real momentum lower for now but I would probably still be skewed toward fading rallies if given the opportunity. The first resistance on the day is back toward 0.6970-0.7000 and then the 0.7050-0.7100 area comes back into play. I will be watching to see if the AUD can build on this break back below 0.7000, looking for a test of the pivotal 0.6800-0.6850 support at some point. 

• MNI - RBA Concern Policy Restrictiveness May Be “Modest”, Inflation Concerns Persist: The RBA hiked rates 25bp to 4.6% on 29 September and the minutes explain the reasoning, which was mainly communicated on the day, but the tone was generally hawkish as it retained its cautiousness. There was no indication that it believes it has done enough as it is concerned the degree of restrictiveness may only be "modest". While inflation risks were materialising, it remained concerned regarding upward inflation pressures.
• MNI - Cost Pressures Elevated Increasing Risk Of Pass Through: While NAB September business confidence deteriorated further to -13, lowest since May, it is the survey's price and cost components that are of interest given the RBA's September minutes. They remained elevated, Q3 2026 above Q3 2025 across the board, and inconsistent with the RBA's inflation target, but in line with the minutes' observation that "increasingly prevalent messages from liaison about broad-based cost pressures and growth in unit labour costs remaining higher than judged to be consistent with the inflation target".  
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.6935(AUD431m), 0.6950(AUD850m), 0.7050(AUD324m). Upcoming Close Strikes : 0.6900(AUD607m Oct 15), 0.6950(AUD579m Oct 16), 0.7000(AUD687m Oct 15) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 37 Points

Fig 1: AUD/USD spot Daily Chart

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