AUSSIE BONDS: Richer On Day But Little Changed After Jobs Data
Apr-17 01:59
ACGBs (YM +1.0 & XM +5.5) are holding richer on the day, little changed after the release of the March Employment Report.
- March employment rose 32.2k, less than expected, while the unemployment rate ticked up 0.1pp to 4.1%. February was revised down 0.1pp to 4.0%. The participation rate rose 0.1pp to 66.8%, after the sharp drop seen in the previous month.
- (ABS) "A higher than usual number of people reported working reduced hours this month due to bad weather, coinciding with ex-Tropical Cyclone Alfred and other major weather events in New South Wales and Queensland."
- "The underutilisation rate, which combines the unemployment and underemployment rates, remained at 9.9 per cent. This was 4.0 percentage points lower than March 2020."
- Cash ACGBs are 1-6bps richer on the day with the AU-US 10-year yield differential at -2bp.
- The bill strip pricing is flat to -2 after bull flattening early in the session.
- RBA-dated OIS pricing gives a 50bp rate cut in May is given a 21% probability, slightly less than pre-Jobs data, with a cumulative 117bps of easing priced by year-end (based on an effective cash rate of 4.09%).
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AUDNZD: Breaks To Fresh YTD Lows Sub 1.1000, Key Data Releases On Thursday
Mar-18 01:52
The AUD/NZD cross continues to track lower, the pair last around 1.0955/60, fresh lows since the first half of Dec last year. The pair is sub all key EMAs, with the 200-day just above 1.1000. Dec lows last year were at 1.0933, while late Sep last year the pair printed at 1.0850.
- The move down in AUD/NZD has some sponsorship from lower AU-NZ 2yr swap spreads, see the chart below (swap spreads are green, AUD/NZD is white on the chart). Arguably though the move lower in the cross has been more dramatic than implied by this relative swap shift.
- The bias for relative swap spreads may still skewed to the downside given relative starting points for the RBA and RBNZ easing cycles. On Thursday we get Aust jobs data. The market expects +30k jobs growth and a steady unemployment rate (4.1%).
- On the same day, NZ Q4 GDP prints, which is expected to show economy emerged from recession (q/q growth forecast at 0.4%).
- The other line on the chart is relative Aust to NZ commodity prices (the orange line). This series has been trending in favor of NZD for sometime, but doesn't correlate as strongly with AUD/NZD short term moves as the AU-NZ 2sy swap spread does. Broadly NZ dairy prices have been outperforming Aust commodity prices for some time.
Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spread & Aust to NZ Commodity Prices
Source: MNI - Market News/Bloomberg
AUD: A$ Continues To Receive Support From Equity Rally
Mar-18 01:50
AUDUSD is off its intraday low of 0.6379 helped by stronger HK/China equities during a session that has had little new information so far. The pair is currently slightly higher on the day at 0.6385, close to today’s high. The USD index is up 0.1%.
- Aussie continues to trend lower against the kiwi with AUDNZD down 0.1% to 1.0958, close to the intraday low, and trading through the session below 1.1000.
- AUDJPY is up 0.2% to 95.47 as the risk-averse yen softens. AUDEUR is 0.1% higher at 0.5852, close to the high, and AUDGBP +0.1% to 0.4918.
- RBA Assistant Governor (Economic) Hunter spoke at the AFR banking summit about monetary policy’s data dependence and said that US policy was the key uncertainty at the February meeting. She didn’t add any comments about the rate outlook.
- Equities are generally stronger with the ASX up 0.3% and Hang Seng +2.1%, while the S&P e-mini is down 0.2%. Oil prices are only slightly higher with WTI +0.1% to $67.62/bbl. Copper is up 0.4% and iron ore around $102.50/t.
- Later US February housing data, IP/capacity and trade prices print. Euro area January trade, March ZEW survey and Canadian February CPI are also released.
CHINA: Central Bank Injects Liquidity during OMO.
Mar-18 01:29
- The PBOC issued CNY273.3bn of 7-day reverse repo at 1.5%.
- Today’s maturities CNY37.7bn.
- Net liquidity injection CNY235.6b.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted Average Index is at 1.70%, from yesterday’s close of 1.89%.
- China’s overnight interbank repo rate is 1.75%, down from yesterday's close of 1.84%
- China’s 7-day interbank repo rate is 2.00%, up from yesterday's close of 1.92%.
