AUD: A$ Pressured By Weaker Risk Sentiment, Remains In Bullish Trend

The overnight range was 7.0656 - 7.0729, Asia is currently trading around 7.0710. The pair is consolidating around 7.0700, for the moment ignoring the rebound in the USD. The pair still looks to be under pressure and the PBOC has a job on its hands to turn this around. The PBOC has not been as aggressive the last couple of days but the market will continue to watch warily for pushback. On the day watch to see if demand toward the 7.0600-7.0650 area continues to be supported and if the USD/CNH can potentially drift higher participating in the bounce of the USD heading into the FOMC. I suspect sellers will be lining up again on a bounce back towards the 7.0900-7.1200 area if they do see it.

• MNI BRIEF: China To Adopt More Proactive Policies. China will continue to implement a more proactive fiscal policy and moderately loose monetary policy, increase counter- and cross-cyclical adjustments, and improve the efficiency of macroeconomic governance, Xinhua News Agency reported Monday following the Politburo meeting in Beijing.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 7.0720($305m), 7.0870($310m). Upcoming Close Strikes : 7.1088($1.2b Dec 10) - BBG
• The USD/CNH Average True Range for the last 10 Trading days: 101 Points
• Data/Event : Money Supply, CPI and PPI are out Wednesday with modest improvements forecast for CPI, whilst PPI remains firmly negative.

Fig 1 : USD/CNH Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 95.895 @ 15:59 GMT Dec 08
• SUP 1: 95.890 - Low Dec 03
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.114 - 1.0% 10-dma envelope

Prices printed fresh pullback lows last Thursday, breaking through January lows to touch 95.890. The slower pricing for additional RBA easing - and partial pricing for a return to rate hikes next year - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.760 as the next major support. 

Gold & silver were slightly lower pressured by a stronger US dollar (BBDXY +0.1%) and higher yields but range traded ahead of Wednesday Fed decision. The OIS market continues to have around 23bp of easing, which precious metals have also priced in. They are now waiting to gauge the monetary policy short-term outlook as there has been talk of a hawkish cut but further out the replacement of current Fed Chair Powell is assumed will be dovish. Recent ranges are likely to persist until Wednesday’s Fed decision and statement.

• The USD OIS market currently has another two rate cuts by the October 2026 FOMC meeting, which could rise on a dovish Fed or softer labour market data.
• Gold fell 0.2% to $4190.66/oz off the intraday low of $4176.42. It reached $4218.96 late in the Asian session. The yellow metal continues to trade between initial resistance at $4264.7 and support at $4145.3, 20-day EMA.
• Silver is down 0.3% to $57.156/oz after spending most of the European/US sessions around $58.20/40. It remains in an uptrend rising 2.9% this month and is posting higher highs and higher lows. Initial resistance is at $59.334, 5 December high, while support is $54.003, 20-day EMA.
• The market for silver remains very tight, which could drive further price increases, but technical indicators signal that it is close to overbought.