FOREX: A$ Lower Post CPI, But Limited Follow Through, Steady Trends Elsewhere

The focus of this week will be Tuesday’s RBA decision and Thursday’s November jobs data after October disappointed. Rates are unanimously forecast to remain at 4.35% and so the guidance will be monitored closely for any changes. The unemployment rate is expected to tick up.

• Tuesday sees the November NAB business survey released. After the weak Q3 GDP outcome, any further deterioration in business conditions will be concerning. The labour and price/cost components are also important.
• Bloomberg consensus is again forecasting a 25k increase in employment in November with the unemployment rate rising 0.1pp to 4.2%. The RBA is projecting it to rise to 4.3% in Q4 2024. The participation rate is expected to remain elevated at 67.1%.
• Tuesday’s RBA meeting will be followed by Governor Bullock’s press conference. Also Deputy Governor Hauser speaks on Wednesday at the ABE annual dinner. On Thursday, Assistant Governor (Financial System) Jones speaks and Assistant Governor (Economic) Hunter on Friday.

The latest round of ACGB Nov-29 supply comes as expected pricing comfortably through mids (weighted average yield was 1.21bps through prevailing mids, per Yieldbroker).

• Additionally, the cover ratio rose to 3.7850x from 3.100x.
• As noted in the MNI Auction Preview, today's auction smooth absorption occurred despite an outright yield that was around 35bps lower than the previous auction level.
• On the positive side, it was important to acknowledge that the sentiment towards global bonds had improved over the past month.
• The Nov-29 line is little changed in post-auction trading.

Risk-averse currencies outperformed on Friday with USDJPY down slightly to 150.04 after a low of 149.37 and USDCHF at 0.8787 following a close-to-expectations US November payroll release which drove the BBDXY USD index 0.2% higher. Also Uni of Michigan consumer sentiment and 1-year ahead inflation expectations picked up buoying the greenback. 

• USDJPY is down slightly at around 149.88 at the start of today’s trading helped by a better Q3 net export contribution and lower October trade deficit. Initial support for the pair is at 148.65, 3 December low, and resistance at 151.25, 50-day EMA. Later the November Eco Watchers survey prints.
• Risk-sensitive commodity currencies underperformed in the stronger dollar environment. AUDUSD fell below 64c to be 1% lower at 0.6390 after an intraday trough of 0.6373, below initial support. It returned to around 64c during APAC trading today but is now at 0.6395 with the trend condition bearish. AUDJPY fell to a low of 95.52, the lowest since mid-September, and finished down a percent to 95.89. It is currently around 95.83.
• NZDUSD was down 0.9% to 0.5831 but is currently slightly higher at 0.5834. This left AUDNZD down only slightly at 1.0959 after falling to 1.0942.
• In Australia the focus this week will be Tuesday’s RBA decision and Thursday’s November jobs data. In NZ, it will be Thursday’s November card spending release.
• In other markets, equities on Friday were generally stronger with the S&P +0.25% and Euro stoxx +0.5% but FTSE down 0.5%. The ASX is currently lower and KOSPI -1.6%. Oil prices were lower with WTI down 1.7% to $67.17/bbl. Copper was slightly higher and iron ore is around $104/t.