China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
US Gas Market Poised for Supercycle: Bernstein Analysts 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Urban studies: Doing research when every city is different 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Wall Street Analysts Weigh in on Latest NFP Data 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
We have made no changes to our year-ahead AUDUSD forecasts and still see AUD at USD0.65 by Jun-20 on the back of a weaker growth backdrop for the global economy and our expectation of further easing from the RBA in H1’20.
We maintain the bearish stance on Kiwis dollar, forecasting 0.62 levels. We emphasized in the recent past that, after initially leading the easing pack, NZD had begun to drift higher
reflecting a convergence of dovish policy stances (particularly with respect to the Fed and RBA).
This week we opted for some intra-week adjustments to our portfolio by locking in profits on our NZDUSD short ahead of a slew of important central bank catalysts and given already-large moves in markets in less liquid conditions. We also closed our existing AUDJPY short near flat, but kept both the beta to AUD and the overall defensive tilt of the portfolio distinctly intact by rotating into short AUDUSD in cash, which also keeps us slightly net long USD position open as well. These moves are were made in light of potential bounces in risk ahead of a number of likely dovish central bank events and some August seasonality dynamics. The broader composition of the portfolio continues to position for a grind lower in growth-sensitive currencies including AUD and NZD as the global growth continues to underwhelm and the trade war drags on.
Locally, both AUD and NZD sit in the midst of an ongoing central bank easing cycle, while growth and inflation outcomes are still trending soft. Over the medium term, these should be exacerbated by ongoing external dynamics from moderating China growth, trade war spill-over and poor historical performance during Fed easing cycles.
Each are also subject to important structural adjustments taking place over the medium- term. While the domestic calendars look somewhat light in the near-term, especially in light of the RBNZ’s surprise 50bp cut, the overall direction for the antipodeans is likely lower but now through a slow and potentially uneven grind with both central banks on hold for at least the next couple months.
Trade tips:
Book profit on NZDUSD cash short intra-week. Marked at +1.99%
Square-off AUDJPY shorts in cash. Marked flat.
Sold AUDUSD intra-week. Marked at +0.54%.
Hold a 6m NZDJPY put spread. Paid 1.07% on 31stMay. Marked at +1.80%. Courtesy: JPM
