AUD: A$ Little Changed Despite Higher US Equity Futures, AUD/JPY Near 93.00
Mar-13 23:37
AUD/USD tracks near 0.6285/90 in early Friday dealings. The A$ lost 0.57% for Thursday's session, with intra-session lows just under 0.6270, so not too far away from current levels. The A$ was the second worst performer on Thursday after SEK, and dipped nearly 0.90% versus the yen, as equity risk off gripped markets.
- Technically for AUD/USD, on the downside, a move below 0.6187, the Mar 4 low, is required to reinstate a bear threat and open the bear trigger at 0.6088, the Feb 3 low. Still, a short-term bullish theme in AUDUSD remains intact for now. A resumption of gains would expose key short-term resistance at 0.6409, the Feb 21 high.
- Both US and EU equity markets finished weaker on Thursday, amid concerns around US/EU trade tensions escalating. We have seen US futures open up firmer in the first part of Friday trade, Eminis last around +0.50% higher. This followed headlines the Democrats would aim to prevent a near term government shutdown.
- AUD/JPY is marginally higher in early Friday dealings, the pair last near 93.00. Thursday lows were at 92.54. Both 20- and 50-day EMAs have acted as strong resistance, keeping a bearish threat at the fore. Two lows at 91.86 provide initial support, of which a breach would target a move to the carry unwind lows around 90.00 from August last year.
- The local data calendar is empty in Australia until next week, with the main focus on Feb jobs data (out next Thursday).
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US TSYS: Tsys Futures Close Lower As Powell States No Urgency For Cuts
Feb-11 23:36
- Tsys futures closed Tuesday's session lower following Powell, in US Senate committee testimony, reiterated that there’s no urgency to cut interest rates further, there was strong demand for an auction of 3yr notes, which is the first of three Treasury coupon auctions this week, aided the steepening move. TU closed -01¼ at 102-22⅜, while TY closed - 08+ at 108-30+.
- In options/flows there was a futures flows included a DV01 $1m block sale in SOFR futures, while a DV01 $1m buyer of 2yr note futures looked to fade the early weakness, while later in the session there was continued selling of 10yr puts, a sign of further profit-taking on a large wager built last week.
- Cash tsys curves bear-steepened, with yields closing 1bps to 4.5bps cheaper. The 2yr closed +0.9bps at 4.283%, while the 10yr closed +3.8bps at 4.535%. The 2s10s climbed 2.7bps to 24.568, while the 2s20s rose 3.3bps to 51.25
- The Fed's Williams expects inflation to continue declining toward the 2% target but warns of policy-related uncertainties. He sees the Fed’s current restrictive stance as supporting both inflation control and economic stability but notes that reaching 2% inflation will take time. He highlighted slowing wage growth and anchored inflation expectations as positive sign and forecasts 2% economic growth in 2025-2026, with inflation falling from 2.5% this year to 2% in the coming years.
- Ahead of CPI later today, fed-dated OIS is pricing in about 35bps of cuts this year, with the first full 25bps cut priced for September.
AUSSIE BONDS: May-41 Supply Faces Lower Yield Than Last Outing But Steeper Curve
Feb-11 23:33
Bidding at today’s A$400mn auction of the 2.75% 21 May 2041 bond is likely to be shaped by several key factors:
- The outright yield is 10bps lower than at the previous auction and 20bps below its November 2024 high.
- The 3/10 yield curve has steepened by 10bps since the last auction and is near its steepest level since August 2022.
- The 10/20 yield curve is also 10bps steeper than at the previous auction but remains 5bps below its September 2024 high.
- Sentiment toward longer-dated global bonds has improved since mid-January, with the US 10-year Treasury yield falling by 25bps, supporting demand for duration.
- Results are due at 0000 GMT / 1100AEST.
AUSSIE BONDS: AUCTION PREVIEW: ACGB May-41 Supply Due
Feb-11 23:26
The Australian Office of Financial Management (AOFM) will today sell A$400mn of the 2.75% 21 May 2041 bond. The line was last sold on 18 November 2024 for A$300mn. The sale drew an average yield of 4.8759%, at a high yield of 4.8800% and was covered 3.3333x. There were 49 bidders, 16 of which were successful and 9 were allocated in full.
- The AOFM also plans to sell A$700mn of the 1.50% 21 June 2031 bond on Friday. Accordingly, this week's ACGB supply is lighter than the recent average weekly issuance of $1500mn.
- According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to around $95 billion ($46.4 billion has been completed). This includes around $2 billion of Green Treasury Bond tenders ($600 million has been completed). Issuance of Treasury Indexed Bonds is expected to be around $3 billion ($1.7 billion has been completed).
- Results are due at 0000 GMT / 1100AEST.
