AUSSIE 3-YEAR TECHS: (U2) Cracks Bear Trigger on Recent Bond Rout
- RES 3: 98.350 - High Mar 3
- RES 2: 97.975 - High Mar 16
- RES 1: 97.530 - High Mar 31
- PRICE: 96.160 @ 15:37 BST Jun 21
- SUP 1: 95.920 - Low Jun 16
- SUP 2: 95.764 - 3.0% Lower Bollinger Band
- SUP 3: 95.564- 1.0% 10-dma envelope
Aussie bond futures extended the recent downtrend last week, taking out the near-term bear trigger at the YTD lows printed in May at 96.675 on the continuation contract. This keeps the primary trend direction pointed lower, with moving average studies adding to the pressure. Further weakness opens 95.764 - the 3.0% lower Bollinger Band as well as 95.564, the lower band of a moving average envelope. Key short-term resistance remains 97.530, the Mar 31 high.
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NZD: Kiwi Rises On Upcoming RBNZ MonPol Decision, Trans-Tasman Spillover
NZD/USD creeps higher this morning in anticipation of RBNZ monetary policy meeting this week and a trans-Tasman spillover in the wake of Australia's federal election.
- The Labor Party is on track to take power in Australia, most likely with majority of seats in parliaments. The vote count is ongoing but the perception that the chance for a hung parliament has narrowed lends support to the AUD.
- Stats NZ will publish quarterly retail sales data on Tuesday. Consumer spending is expected to have barely grown in Q1 as New Zealand was facing the spreading outbreak of Omicron.
- But main focus this week falls on Wednesday's Monetary Policy Statement from the RBNZ and the subsequent presser with Governor Orr. Policymakers are expected to deliver the second consecutive 50bp rate hike.
- Swaps market prices an 85% chance of a 50bp rate rise come the end of this week's meeting, and outcome favoured by 16/18 economists surveyed by Bloomberg.
- Elsewhere, PM Ardern will lead New Zealand's trade delegation to the U.S. this week, but her meeting with President Biden is yet to be confirmed, as the Premier has only just recovered from COVID-19.
- NZD/USD trades +19 pips at $0.6413, poised to test May 19 high of $0.6417. A clean break here would give bulls a green light for targeting May 5 high of $0.6568. Bears would be pleased by a dip through May 18 low of $0.6291, which would expose key support from May 12 low of $0.6217.
USDCAD TECHS: Bear Cycle Still In Play
- RES 4: 1.3185 High Nov 13 2020 and 2.0% 10-dma envelope
- RES 3: 1.3091 High Nov 24 2020
- RES 2: 1.3077 High May 16 and the bull trigger
- RES 1: 1.2896/2982 High May 18 / High May 16
- PRICE: 1.2834 @ 21:05 BST May 20
- SUP 1: 1.2759 50-day EMA
- SUP 2: 1.2714 Low May 5 and a key support
- SUP 3: 1.2568 Low Apr 22
- SUP 4: 1.2459 Low Apr 21
USDCAD remains below 1.3077, May 16 high, and maintains a short-term bearish tone - the pair traded lower Friday. The recent move down though is considered corrective and the broader trend outlook is bullish. Recent gains resulted in a breach of 1.2914, May 2 high, and 1.2964, the Dec 20 2021 high. The break of the latter marks an important medium-term bullish development. Key support to watch is at 1.2714, the May 5 low.
AUDUSD TECHS: Firmer Short-Term Tone
- RES 4: 0.7266 High May 4/5 and a bull trigger
- RES 3: 0.7187 50-day EMA
- RES 2: 0.7135 Low May 6
- RES 1: 0.7074 High May 20
- PRICE: 0.7039 @ 21:02 BST May 20
- SUP 1: 0.6950/29 Low May 18 / Low May 12 and the bear trigger
- SUP 2: 0.6805 Low Jun 22 2020
- SUP 3: 0.6784 0.764 proj of the Apr 5 - May 2 - 4 price swing
- SUP 4: 0.6759 50.0% retracement of the Mar ‘20 - Feb ‘21 upleg
AUDUSD traded higher last week and in the process breached 0.7054, the May 11 high. An extension higher would strengthen the current bull cycle and signal potential for a climb towards the 50-day EMA at 0.7187. Gains are still considered corrective and the primary direction remains down. The bear trigger is unchanged at 0.6829, the May 12 low. A break would resume the downtrend.
