AUD: A$ Pressured By Upcoming US Tariffs, AUDUSD Breaks Below Support
Feb-27 21:52
Aussie underperformed the G10 again as the US dollar jumped on news that 25% tariffs on US imports from Canada and Mexico will go ahead next week as well as an additional 10% on China, which could indirectly impact Australia. There are concerns that protectionism will reduce global growth. AUDUSD fell 1.1% to 0.6235, close to the intraday low, as the USD index rose 0.6%. The pair is still up 0.7% this year.
- Technicals continue to suggest that the fall in AUDUSD is corrective. Support at 0.6250, 27 February low, was breached opening up 0.6231 which has provided a floor. Initial resistance is at 0.6409, 21 February high.
- The risk-averse yen outperformed leaving AUDJPY down 0.6% to 93.41 after rising to 94.51.
- Risk-sensitive kiwi also underperformed resulting in little change in AUDNZD at 1.1072 after peaking at 1.1087.
- AUDGBP trended lower over Thursday and is now down 0.6% to 0.4948, the lowest since mid-December. AUDEUR fell 0.3% to 0.5996.
- Equities sold off with the S&P down 1.6% and Euro stoxx -1.0%. Oil prices are higher with Brent +1.7% to $73.78/bbl. Copper is up 0.1% and iron ore is lower around $104/t.
- Today RBA private credit for January is released and expected to rise 0.5% m/m.
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NZD: NZD/USD Falls On Trump Tariff Talk, Hovers Around 20-Day EMA
Jan-28 21:47
- The NZD/USD fell 0.47% to 0.5666 on Wednesday as the USD found support following further headlines from Trump around Tariffs. There is very little in the way of local data from New Zealand for the remainder of the week, while the majority of Asia is out this week for Chinese New Years.
- Looking at technical levels, initial resistance is 0.5720 (50-day EMA) a break here would open a move to 0.5782 (Dec 16 highs) while we trade just above initial support at 0.5657 (20-day EMA) a break back below here would open a move to 0.5600. The MZCD indicator is starting to print decreasing green bars, while the RSI indicator is coming off recent highs, however still remains just above 50.
- NZs economy is subdued but showing early signs of a turnaround, with growth expected in 2025, according to Treasury chief economic adviser Dominick Stephens. He attributes the positive outlook to declining interest rates, a weaker exchange rate, and rising commodity prices, which typically support economic growth. Stabilizing card spending, sideways-moving house prices, and steady bank lending further indicate a potential recovery. However, Stephens cautions that global uncertainty, including new US trade policies, could impact trade flows, product prices, and the exchange rate, making the outlook uncertain.
- Finance Minister Nicola Willis aims to achieve a budget surplus in the fiscal year ending June 2028, one year earlier than Treasury's projection under the OBEGALx measure, which excludes ACC-related revenue and spending. Speaking to a parliamentary committee, Willis emphasized a disciplined and modest budget to be delivered on May 22, focusing on regulatory measures to boost economic growth.
- RBNZ dated OIS is pricing in a 95.1% chance of a 50bps cut next month, with another 25bps cut priced April/May. There is a cumulative 117bps of cuts priced through to the end of 2025.
- Expiries 0.5625 (NZD320m), there is no upcoming notable flows over the next few sessions
ASIA: Most Asia Pac Markets Closed Today For LNY
Jan-28 21:46
A reminder that most Asian markets are closed for LNY today. See below for more details.
- China out until neat Wednesday (the 5th of February).
- South Korea (27th of Jan to 30th), returning this Friday
- Taiwan (27th of Jan to 31st), returning Feb 3, next Monday
- Hong Kong (29th of Jan to 31st), returning Monday Feb 3.
- Singapore (29-30th of Jan), returning Friday 31st of Jan.
- Malaysia (29-30th of Jan), returning Friday 31st of Jan.
- Indonesia (27-29th of Jan) returning Thursday 30th of Jan.
- Philippines (just out 29th Of Jan).
- Thailand markets are open all this week.
JPY: Dips, But Technicals & Yield Diffs Still Suggests USD/JPY Downside Risks
Jan-28 21:38
USD/JPY's rebound fell just short of the 156.00 level on Tuesday, while pull backs to 155.00 were supported in US trade. We track near 155.50/55 in early Wednesday dealings, having lost 0.65% for Tuesday trade. At the margin, yen was the worst performer in the G10 space (closely followed by the AUD, down 0.60%). All the majors fell against the USD, with the DXY up 0.50%, BBDXY gaining 0.30%.
- From a technical standpoint, the primary trend condition in USDJPY remains bullish, however, Monday’s move down highlights a stronger short-term bear cycle. The pair has breached two important support points; 155.12, the 50-day EMA, and 155.13, a trendline drawn from the Sep 16 ‘24 high. This opens 152.55, a Fibonacci retracement point. Initial firm resistance has been defined at 156.75, the Jan 23 high.
- Broader USD sentiment stabilized as the Tuesday session unfolded, with APAC gains from yesterday largely fueled by on-going Trump tariff threats. US equity sentiment was better on Tuesday, recouping some of Monday's AI competition related losses. This may have weighed on yen at the margins, but yen crosses didn't see significant upside.
- US yields were close to unchanged as the markets await the FOMC decision due later US time on Wednesday. US-JP yield differentials are still suggesting upside USD/JPY pressures will be capped, with spreads for 2yr and 10yr differentials around multi week lows.
- Today locally we have Jan consumer confidence, along with the minutes from the BoJ board meeting in December.
- In the option expiry space, note the following for NY cuts later today: Y154.00($627mln), Y154.75($700mln), Y155.00($1.4bln), Y156.00($544mln).
