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USD Weakness Limited As Biden Exits Race, NZD Tests Sub 0.6000, Multi Month Lows

FOREX
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The USD was soft in early trade, as late US Sunday news saw President Biden drop out of the Presidential race. This saw some early pressure on the Trump reflation theme, as election odds for the Republicans have moved away from cycle highs seen through last week. Still, the USD has recovered most of these losses.

  • The BBDXY USD index got to 1253.37 in the first part of trade, before rebounding to 1256. We sit slightly lower in latest dealings. EUR sits marginally higher against the USD, but remains comfortably within recent ranges. USD/JPY is around 157.50, little changed for the session.
  • Both US Tsy and equity futures opened higher, but sit away from best levels now. Cash Tsy yields sit slightly lower, more so at the back end, the 10yr back to the low 4.22% region (off 1.6bps).
  • AUD and NZD have both fallen around 0.20%, underperforming the major moves. Weaker yuan levels post a surprise revere repo and loan prime rate cuts has weighed and likely driven some negative spill over. Broader China sentiment still remains cautious around the growth outlook, with incremental policy changes not seen as dramatically shifting the growth outlook.
  • Regional equity markets are mostly weaker as well, led by tech sensitive plays, which has likely hurt FX risk appetite at the margins as well.
  • NZD/USD is now sub 0.6000, fresh lows back to the first half of May. AUD/USD at 0.6670 is back towards early July levels.
  • The data calendar is very light through Monday offshore markets.
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The USD was soft in early trade, as late US Sunday news saw President Biden drop out of the Presidential race. This saw some early pressure on the Trump reflation theme, as election odds for the Republicans have moved away from cycle highs seen through last week. Still, the USD has recovered most of these losses.

  • The BBDXY USD index got to 1253.37 in the first part of trade, before rebounding to 1256. We sit slightly lower in latest dealings. EUR sits marginally higher against the USD, but remains comfortably within recent ranges. USD/JPY is around 157.50, little changed for the session.
  • Both US Tsy and equity futures opened higher, but sit away from best levels now. Cash Tsy yields sit slightly lower, more so at the back end, the 10yr back to the low 4.22% region (off 1.6bps).
  • AUD and NZD have both fallen around 0.20%, underperforming the major moves. Weaker yuan levels post a surprise revere repo and loan prime rate cuts has weighed and likely driven some negative spill over. Broader China sentiment still remains cautious around the growth outlook, with incremental policy changes not seen as dramatically shifting the growth outlook.
  • Regional equity markets are mostly weaker as well, led by tech sensitive plays, which has likely hurt FX risk appetite at the margins as well.
  • NZD/USD is now sub 0.6000, fresh lows back to the first half of May. AUD/USD at 0.6670 is back towards early July levels.
  • The data calendar is very light through Monday offshore markets.