ARS: A$ Ticks Up, But Bearish Technical Set Up Remains
AUD/USD attempted to break back above 0.6200 late in Tuesday Asia Pac trade, but found selling interest. Dips were supported sub 0.6170, keeping overall ranges fairly tight. We track near 0.6190 in early Wednesday dealings (up around 0.20% for Tuesday's session). Broader USD indices were softer on Tuesday, the BBDXY index down 0.44%, largely thanks to a rebound in the single currency, with EUR/USD up 0.60%, regaining the 1.0300 handle.
- There is little change in terms of the AUD/USD technical backdrop, with bearish conditions still intact. Note that MA studies are in a bear-mode position too. Scope is seen for an extension towards the 0.6100 handle next. Initial firm resistance to monitor is 0.6240, 20-day EMA. The 50-day EMA is at 0.6358.
- US yields were mixed, softer at the front end, but supported at the back end, the 10yr yield holding above 4.78%. The US PPI print was softer than expected, which comes ahead of tonight's key US CPI print. EUR/USD was also aided by firmer German yields. AUD/EUR is back closer to 0.6000, but holding within recent ranges, while EUR/GBP rose above 0.8400, fresh multi month highs.
- Global equity market sentiment was mostly positive, although aggregate moves weren't large. AUD/JPY is a little higher, last near 97.80, but remains within recent ranges.
- Commodity indices saw the aggregate Bloomberg index down 0.27%, as oil lost some ground. The base metals sub index was flat.
- The local data calendar is empty today, with domestic focus on tomorrow's Dec jobs data.
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AUD: AUDUSD Lower Last Week As Bearish Conditions Persist
Aussie underperformed most of the G10 on Friday after outperforming Thursday to be down 0.5% on the week. It fell 0.1% to 0.6362 after a high of 0.6384 as higher US yields boosted the greenback (BBDXY USD +0.1%) and softer risk appetite weighed on the A$. The pair is currently trading lower at 0.6356.
- A$’s underperformance has reinforced the bearish theme in AUDUSD with lower lows and lower highs. Initial support is at 0.6337, December 11 low, with resistance at 0.6460, 20-day EMA.
- AUDJPY rose 0.6% to 97.79 as the yen was the worst performer in the G10. It is currently around 97.67. AUDNZD was flat at 1.1037 after a high of 1.1059 and is now at 1.1040. AUDEUR trended lower to be down 0.4% to 0.6057 (currently around 0.6060), while AUDGBP rose 0.3% to 0.5042 but has started today around 0.5037.
- Equities were lacklustre with the S&P flat, Eurostoxx +0.05% and FTSE down 0.1%. Oil prices were higher with Brent up 1.3% to $74.35/bbl. Copper fell 1.2% and iron ore is around $104/t.
- Today preliminary S&P Global December PMIs print.
ASIA: Coming Up In The Asian Session On Monday
| 0130GMT | 0930HKT | 1230AEST | China Nov Home Prices |
| 0200GMT | 1000HKT | 1300AEST | China Nov Industrial Productions |
| 0200GMT | 1000HKT | 1300AEST | China Nov Retail Sales |
| 0200GMT | 1000HKT | 1300AEST | China Nov Fixed Assets Ex Rural |
| 0200GMT | 1000HKT | 1300AEST | China Nov Property Sales |
| 0200GMT | 1000HKT | 1300AEST | China Nov Surveyed Jobless Rate |
| 0300GMT | 1100HKT | 1400AEST | South Korea Oct Money Supply |
| 0400GMT | 1200HKT | 1500AEST | Indonesia Nov Trade Balance |
| 0500GMT | 1300HKT | 1600AEST | India Dec HSBC PMI Composite |
| 0630GMT | 1430HKT | 1730AEST | India Nov Wholesale Prices |
| China Nov FX Net Settlement - Clients CNY | |||
| India Nov Trade Balance | |||
| Indonesia Oct External Debt | |||
| Philippines Oct Overseas Cash Remittances |
JPY: Goldman Sachs On Tariffs & USD Risks Into FOMC
Goldman Sachs: "USD: Tariff trial run. In a busy week, reports about China policymakers considering a weaker Renminbi in response to potential tariffs offered the most revealing price action. CNY-sensitive currencies fell, the Euro showed notable underperformance, and the Yen strengthened even more than the Dollar. While we did not think the report contained anything surprising, and even aligned with our forecasts, this “trial run” strengthens our confidence that tariffs cannot be fully priced ahead of time given CNY's central role, and we still think there would be broad reverberations across currency markets despite the substantial moves over the last month. In the meantime, we continue to see some downside risks to the Dollar after a strong run heading into next week’s FOMC meeting. We expect the Committee to continue to stress two-sided risks to the outlook, which could come as some surprise to the market which has recently shown less concern about softening labor market demand than earlier in the year. That said, we think it is revealing that the FX market was willing to look through a less forceful ECB delivery and instead had an outsized response to the strong US NFIB sentiment. We take this as a sign that the market is more focused on the forward, and the potential for more divergent outcomes ahead, which should lower the bar for the FOMC as well. If the “dots” show a higher terminal rate, that should limit the scope for Dollar depreciation. This would be particularly true in rates-sensitive crosses, including our preferred expression to be long USD/SEK, where we also expect the Riksbank to deliver another rate cut despite firmer inflation data. This type of balanced message would also likely help push USD/JPY gradually higher still"
