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FOREX: Safe Havens Down, A$ Firms On Regional Equity Gains Post China Repo Cut

FOREX
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Safe havens have lost ground in the first part of Monday trade, while the AUD has outperformed. The BBDXY and DXY USD indices sit little changed. Yen is off around 0.25%, while CHF is down by a little over 0.10%. 

  • The backdrop from a regional equity market standpoint has been positive, with most major markets higher at this stage. China related sentiment has been supported by a 10bps cut to 14 day repo rate. This is not a widely used benchmark but may signal further policy easing is coming. A press conference will be held tomorrow, where the PBoC Governor will be in attendance.
  • US equity futures are also firmer higher, up 0.30% for Eminis and nearly 0.60% for Nasdaq futures.
  • This has likely helped AUD/USD, which is the outperformer in the G10 space, up 0.35% to 0.6835. Recent highs at 0.6839 are very close by. Late December 2023 levels rested just above 0.6870.
  • We had earlier preliminary PMI data in Australia, for September, but sentiment wasn't shifted. NZ's trade deficit widened in August, but didn't impact NZD much. NZD/USD was last a touch higher at 0.6240/45. The AUD/NZD cross is close to recent highs, last near 1.0940/45.
  • USD/JPY got close to Friday highs (144.49) but ran out of steam at 144.46, the pair last near 144.25, still 0.25% weaker in yen terms. Japan markets have been out today, so no cash Tsy trading has taken place. US 10yr futures have edged down but remain within Friday's ranges.
  • Commodities have been mixed, with oil up on the China news and continued geopolitical tensions. Iron ore is softer but hasn't impacted AUD.   
  • Looking ahead on the data front, we have EU and US September preliminary PMIs are released. The Fed’s Bostic, Goolsbee and Kashkari also speak. 
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Safe havens have lost ground in the first part of Monday trade, while the AUD has outperformed. The BBDXY and DXY USD indices sit little changed. Yen is off around 0.25%, while CHF is down by a little over 0.10%. 

  • The backdrop from a regional equity market standpoint has been positive, with most major markets higher at this stage. China related sentiment has been supported by a 10bps cut to 14 day repo rate. This is not a widely used benchmark but may signal further policy easing is coming. A press conference will be held tomorrow, where the PBoC Governor will be in attendance.
  • US equity futures are also firmer higher, up 0.30% for Eminis and nearly 0.60% for Nasdaq futures.
  • This has likely helped AUD/USD, which is the outperformer in the G10 space, up 0.35% to 0.6835. Recent highs at 0.6839 are very close by. Late December 2023 levels rested just above 0.6870.
  • We had earlier preliminary PMI data in Australia, for September, but sentiment wasn't shifted. NZ's trade deficit widened in August, but didn't impact NZD much. NZD/USD was last a touch higher at 0.6240/45. The AUD/NZD cross is close to recent highs, last near 1.0940/45.
  • USD/JPY got close to Friday highs (144.49) but ran out of steam at 144.46, the pair last near 144.25, still 0.25% weaker in yen terms. Japan markets have been out today, so no cash Tsy trading has taken place. US 10yr futures have edged down but remain within Friday's ranges.
  • Commodities have been mixed, with oil up on the China news and continued geopolitical tensions. Iron ore is softer but hasn't impacted AUD.   
  • Looking ahead on the data front, we have EU and US September preliminary PMIs are released. The Fed’s Bostic, Goolsbee and Kashkari also speak.