GOLD: Correction Continues, Unwinds Overbought Conditions

In local morning trade, NZGBs have bear-steepened following a heavy NY session for US tsys.

• Expectations that the April 2 reciprocal tariffs would be flexible, with breaks to countries and sectors as suggested Friday, and would not be as onerous as the more sweeping measures initially threatened underpinned US equities.
• Indeed, stocks took in their stride with other comments from President Trump about expecting auto tariffs.
• The strong risk-on move weighed heavily on US tsys. Concession building ahead of the $183bn in auctions this week added to the selloff, as did the somewhat hawkish comments from the Fed's Bostic, though he is not a voter.
• US 2- and 10-year yields were up 9 bps to 4.03% and 4.33% respectively.
• The local calendar will be empty until Friday when ANZ Consumer Confidence and Filled Jobs data are available.
• NZ Swap rates are 2-4bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is flat to 2bps firmer. 24bps of easing is priced for April, with a cumulative 67bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 5.00% May-54 bond.

NZD/USD dipped slightly for Monday's session. The pair tracks near 0.5725/30 in early Tuesday dealings, up a touch from Monday lows of 0.5711. Broader USD indices were higher, the DXY up 0.21%, as yen lost further ground, while commodity FX (ex NZD) and SEK slightly outperformed. The BBDXY index finished off highs at 1271.76, but still up a touch for the session. 

• For NZD/USD technicals, we are close to the and 50 day (0.5718) EMA support point. A clean break lower could see earlier March lows targeted (0.5638 from March 5). On the topside, we have the 100-day EMA in the 0.5760/65 region, which capped upside in the pair late last week.
• Monday FX sentiment saw the USD supported by better PMI prints in the US (with services up, but manufacturing down), while Trump tariff headlines also influenced. The April 2 tariffs will reportedly be more targeted, with some countries getting reprieves. Still, risk appetite was again buffeted as Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point".
• In the wash up, US equities finished higher, the SPX up 1.76% (just off best levels). US Tsy yields were higher across the board, up 9bps for the 10yr to 4.335%.
• NZ-US 2yr swap spreads have edged down, last near -51.5bps.
• The AUD/NZD cross is up from recent lows, close to 1.0975/80.
• The local data calendar remains empty until Friday's ANZ consumer confidence print.