AUSSIE BONDS: Richer On Day But Little Changed After Jobs Data

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 

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.

• 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%.