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USDJPY TECHS

Bulls Pause For Breath

US EURODLR OPTIONS

Lead Serial Put Spd

EURGBP TECHS

Remains Vulnerable

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The Antipodean cross AUD/NZD pierced the psychological NZ$1.0300 barrier and retreated to its worst levels since Apr 2020, after New Zealand's upbeat Q2 GDP report inspired participants to add hawkish RBNZ bets. Quarterly growth not only topped BBG median estimate but was faster than projected by any of the economists taking part in the survey. NZD landed atop the G10 pile in the immediate aftermath of the release and remained the best performer in the space, despite the backward-looking nature of the data.

  • Trans-Tasman spillover prompted AUD to blip higher against most G10 peers after the publication of Kiwi GDP figures, but the currency reversed gains later in the session. Domestic labour market report proved noisy, with the data was affected by Australia's lockdown dynamics. The Aussie retreated as employment shrank more than forecast and the decline in participation was deeper than anticipated, even as headline unemployment rate unexpectedly dipped.
  • The Australia/New Zealand 2-Year swap spread continued to tighten as the Antipodean data poured fuel on existing central bank outlook divergence. NZ OIS strip prices ~36bp worth of tightening at the next RBNZ meeting, up from ~27bp seen yesterday. In contrast, RBA Gov Lowe earlier this week underscored the cautious approach of Australia's central bank.
  • The yen garnered some strength on the back of waning risk appetite, which saw U.S. e-mini futures turn red. Japanese political headlines continued to do the rounds, with Chief Cabinet Sec Kato noting that the gov't considers calling a special parliament session for Oct 4 to pick the new PM.
  • Looking ahead, U.S. retail sales & jobless claims as well as Canadian housing starts & trade balance will hit the wires later in the day. Speeches are due from ECB's Lagarde & Rehn.