JGB TECHS: (Z5) Bearish Trend Sequence Intact

source:  Bloomberg Finance LP  /   MNI 

The NZD/USD had a range overnight of 0.5863 - 0.5918, Asia is trading around 0.5885. US rates extended lower again on signs the labour market continues to cool but the USD has stubbornly held above its support. The NZD pushed higher in reaction to the NFP but found good selling above 0.5900 capping the move for now. This 0.5900-0.5950 area presents a good opportunity to fade for those who are bearish the NZD, but the caveat to this trade remains the USD’s ability to not break down. CFTC Data shows light positioning in a market that is struggling for a strong trend. US Futures have opened pretty muted morning, E-minis +0.05%, NQU5 +0.15%. 

• MNI INTERVIEW: Fed To Cut Faster After Weaker Jobs - William English. "There's no doubt the labor market report was soft, and that causes them to lean in the direction of easier policy," he said in an interview Friday. "It leans in the direction of easing policy further, faster than maybe the Fed had been inclined to."
• MNI China Data - This week China releases will give further evidence as to whether the recovery is taking hold.  China releases trade data next week with exports forecast to gain +5.4% (from +7.2% in July), and imports to rise modestly to +4.3%.  Aggregate financing will be watched closely as efforts to revive housing remain ongoing after multi-year declines.  On Wednesday CPI and PPI will be released for August and forecasts expect more of the same.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5800(NZD515m Sept 10), 0.5870(NZD320m Sept 10) - BBG
• CFTC Data of last week shows Asset Managers added slightly to their new short position in the NZD -5127(Last -4743), the Leveraged community have completely exited their short and have turned a fraction long +285(Last -225).

Fig 1: NZD/USD Spot Daily Chart

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

The AUD/USD had a range overnight of 0.6530-0.6589, Asia is trading around 0.6550. US rates extended lower again on signs the labour market continues to cool but the USD has stubbornly held above its support. The AUD tried to move higher initially on NFP but momentum failed and it spent the rest of the N/Y session trading heavy and drifting lower. The AUD remains in the middle of its recent multi-month range of 0.6350-0.6650 with little clear long-term direction for now.

• Bloomberg - “French PM Francois Bayrou faces a confidence vote over planned budget measures Monday, one that he is poised to lose, putting stocks and bonds further at risk.”
• “Scott Bessent said the US and Europe are discussing new sanctions and tariffs on Russia to bring Vladimir Putin to peace talks.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6475(AUD596m), 0.6500(AUD531m), 0.6625(AUD445m). Upcoming Close Strikes : 0.6650(AUD597m Sept 11) - BBG
• CFTC Data last week shows Asset managers reduced their shorts for the first time in a while -66025(Last -78758), the Leveraged community though look to be rebuilding their own shorts after winding them down -11860(Last -6447).
• Data/Event: Foreign Reserves

Fig 1: AUD/USD spot 2H Chart

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