AUD: A$ To Fresh Lows Post Strong US NFP, Inflation Gauge, ANZ Job Ads Today
AUD/USD got to fresh cycle lows of 0.6140 on Friday in the aftermath of the stronger than expected US NFP data. We track slightly higher in early Monday dealings, last near 0.6150, after losing 0.80% for Friday's session to be among the worst G10 performers. Only JPY rose against the USD for Friday's session. The USD BBDXY index got to fresh highs above 1320.
- For AUD/USD technicals, the bears remain in control. Round figure support at 0.6100 will be eyed, while 0.6045 and 0.5994 are projections level of the Sep 30 - Nov 6 - 7 price swing. Initial firm resistance to monitor is 0.6257, 20-day EMA. The 50-day EMA is at 0.6374. The pair was last sub 0.6000 during the onset of the Covid pandemic in 2020, we saw lows of 0.5510 before support emerged.
- US yields were stronger across the board post the US NFP beat, the 10yr rising to 4.76%, the 2yr 4.38%, in terms of Tsy yields. Fed rate cut expectations were also tempered further.
- The US real 10yr yield rose to 2.34%, fresh highs back to 2023, and was a headwind for US equity market sentiment. The SPX fell 1.54%. AUD/JPY fell sub 97.00, but tracks just above 97.00 in early Monday dealings, still within recent ranges back to Dec last year.
- The aggregate commodity index rose 2.04% per BBG (aided by oil after fresh US oil sanctions on Russia boosted crude), the base metals up nearly 0.80%, but this didn't help the A$ too much.
- Today on the data front we have the Melbourne Institute Inflation gauge and ANZ job adverts. On Thursday we get Dec jobs data.
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
