AUD: CORRECT: A$ Grinds Higher On Improved Risk Sentiment
AUD/USD is back close to session highs of around 0.6960, largely on improved risk appetite, close to +0.30% for the day.
- Asian equity sentiment has received a boost after 8 of Shanghai's districts (roughly half of the city's districts) recorded no COVID community transmission. The Chinext index is up close to 4.3% at the time of writing.
- Equity futures in the US and EU are pointing higher as well.
- Iron ore is higher, back above $130/tonne, likely on the China news. Oil has also recovered ground.
- These moves are offsetting lower yield differentials with the US, with the 2yr spread back to flat. As we noted yesterday short-term correlations remain stronger with equity and commodity performance.
- Earlier the Westpac-MI Consumer Sentiment Index fell by 5.6% to 90.4. This takes us back to Q3 2020 levels. Still, the move is hardly a surprise given last week's rate hike and weaker equity market sentiment.
- The A$ has outperformed the safe havens in G10 FX, but only by 0.20-0.25%.
- AUD/USD has struggled to get through 0.6980/90 in recent sessions, while we have bounced off 0.6910/15 a couple of times. Current ranges may persist until the US CPI prints later today.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BOBL TECHS: (M2) Heading South
- RES 4: 130.622 50-day EMA
- RES 3: 130.160 High Mar 23
- RES 2: 129.350 High Apr 4
- RES 1: 129.333 20-day EMA
- PRICE: 127.590 @ 05:15 BST Apr 11
- SUP 1: 127.470 Intraday low
- SUP 2: 127.280 Low Sep 18 2014 (cont)
- SUP 3: 126.940 0.382 proj of the Mar 7 - 29 - Apr 4 price swing
- SUP 4: 126.196 0.50 proj of the Mar 7 - 29 - Apr 4 price swing
Bobl futures have traded to a fresh cycle low today confirming a resumption of the primary downtrend. The move lower maintains the broader bearish price sequence of lower lows and lower highs and note that moving averages are also pointing south. The focus is on a move towards 127.280 next, the Sep 18 2014 low (cont). Key short-term resistance has been defined at 129.350, the Apr 4 high.
BUND TECHS: (M2) Fresh Cycle Low
- RES 4: 161.81 High Mar 16
- RES 3: 160.31 High Mar 23
- RES 2: 159.79 High Apr 4 and key short-term resistance
- RES 1: 157.87/59.13 High Apr 7 / 20-day EMA
- PRICE: 157.01 @ 04:56 BST Apr 8
- SUP 1: 155.44 Intraday low
- SUP 2: 155.03 Low Dec 4 2015 (cont)
- SUP 3: 154.97 0.382 proj of the Mar 7 - 29 - Apr 4 price swing
- SUP 4: 153.48 0.50 proj of the Mar 7 - 29 - Apr 4 price swing
Bunds have started the week on a softer note and have traded to a fresh cycle low. The primary trend remains down. Moving average studies are in a bear mode and a broader bearish price sequence of lower lows and lower highs, that has unfolded since Aug / Sep 2019, remains intact. 156.00 has been cleared and this opens 155.03 next, the Dec 4 2015 low (cont). Firm resistance is at 159.79, the Apr 4 high.
AUSSIE BONDS: Curve Steepens
There hasn’t been much in the way of overt headline flow to drive the space during Monday’s session, with the wider dip in core FI markets pulling futures back from their respective Sydney peaks. Note that early Sydney trade saw some curve steepening kick in, perhaps surrounding the ACGB Nov-33 syndication, with little else in the way of other notable factors apparent to drive such a move. YM unch. (after seemingly drawing support from the previously touted steepener flow) & XM -6.0 at typing, with a parallel round of cheapening observed in the 10+-Year zone of the cash ACGB curve.
