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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUDNZD
AUD/NZD continues to track higher, building a base above 1.1100, last trading at 1.1130. This is highs for the pair going back to mid-June (just under 1.1170). As the chart below highlights there is a modest wedge between the AUD/NZD cross and the 2yr AU-NZ swap spread. To be sure, the swap spread is moving in AUD's favor but the last time AUD/NZD was at these levels, the 2yr spread was 10-15bps firmer in AUD's favor. On a government bond spread basis it is a similar story.
- The other support for the AUD is higher iron ore prices, which is helping drive outperformance against other G10 FX as well. The active future in Singapore is up a further 3.3% today, for a cumulative +10.6% gain in the past 3 sessions. We are now back to $110/tonne, versus last week's lows of $97-$98.
- China property stocks continue to find support, with the sub-index up another 3% so far today, after yesterday's 1.29% gain. This follows the recent announcement around a proposed property fund in China which would support the ailing property sector. The fund size could reportedly be as large as 300bn yuan ($44bn), with the aim is getting stalled construction projects going again. We may find out more post this week's Politburo meeting in China.
Fig 1: AUD/NZD & AU-NZ 2yr Swap Spread
Source: MNI/Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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