BONDS: NZGBS: Closes At Bests After Spillover From ACGBs

Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.5% lower at $2621.40 on Friday. 

• Gold’s decline at the end of a subdued holiday-shortened trading week came after mixed US jobless data. The data did little to alter bets on the outlook for Federal Reserve interest-rate cuts. Lower rates are typically positive for gold, which doesn’t pay interest.
• Fed rate cuts into early 2025 gained slightly by Friday’s close vs. morning levels (*) as follows: Jan'25 steady at -2.7bp, Mar'25 -13.3bp (-13.1bp), May'25 -18.5bp (-17.7bp), Jun'25 -26.5bp (-25.7bp).
• According to MNI’s technicals team, the move down undermined the recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low.
• Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2640.0, the 20-day EMA. A breach of this EMA would be positive for bulls.

ACGBs (YM -5.0 & XM -8.5) are weaker and at Sydney session lows on a data-light session. 

• Today, the local calendar will see RBA's Jones-Fireside Chat at Conexus at the Superannuation Chair Forum. The next data releases are CoreLogic Home Value and S&P Global PMI Mfg on January 2.
• Cash US tsys are slightly richer, with a steepening bias, in today’s Asia-Pac session after Friday’s heavy session. US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
• Cash ACGBs are 5-8bps cheaper with the AU-US 10-year yield differential at -16bps.
• Swap rates are 3-6bps higher, with the 3s10s curve steeper.
• The bills strip is slightly weaker, with contracts -1 to -2.
• RBA-dated OIS pricing is slightly firmer across meetings. A 25bps rate cut is more than fully priced by April (125%), with a 58% probability of a February cut. 

KRW and AUD have been the largest movers against the US dollar during APAC trading today with both 0.2% stronger against the greenback. The BBDXY USD index is down slightly but has been moving within a narrow range.

• USDKRW is currently down 0.2% to 1467.35 after initially rising to 1475.45 following continued political instability and a fatal plane crash on Sunday. The investigators into former president Yoon are requesting a warrant for his arrest after his failed attempt to impose martial law early in December. Public authorities have stated that they will act if needed to ensure financial market stability. Korean equities are rallying.
• AUDUSD is up 0.3% to 0.6231, close to the intraday high, as iron ore rises above $100/t again. There are few local events this week. Later today RBA assistant governor (financial system) Jones appears.
• NZDUSD is 0.1% higher at 0.5643, close to today’s peak. AUDNZD is 0.1% higher at 1.1040.
• USDJPY has been moving in a narrow range to be down moderately to 157.79. Only the final estimate of the December Jibun Bank manufacturing PMI was released with a 0.1 upward revision to 49.6.
• European currencies are slightly higher against the USD with EURUSD at 1.043 and GBPUSD 1.2584.
• Equities are mixed with the Hang Seng up 0.2% and KOSPI +0.9% but ASX down 0.5% and Nikkei -0.8%. The S&P e-mini is down 0.1%. Oil prices are higher with WTI +0.1% to $70.68/bbl. Copper is up 0.3% and iron ore is around $100.50/t.