AUD: Asia-Pac: AUD/USD Drifts Toward 0.6550, Look To Fade A Bounce Initially

Gold has rallied again today with it reaching another new high at $4190.97/oz. It is up 1.1% at $4188.3 so far driven by Fed Chair Powell signalling that rates are likely to be cut again on 29 October, which had been almost fully priced in, due to the softer labour market and less concern regarding rising inflation. His comments have also pressured the US dollar (BBDXY -0.2%) and US yields lower. Another 25bp is priced in for the December decision. 

• US-China trade tensions continue to provide support even though talks are taking place. Tuesday China imposed curbs on 5 US units of Korea’s Hanwha shipbuilder and today President Trump threatened to halt cooking oil trade with China.
• Bullion has momentum despite it now flashing overbought. It is above initial support at $4179.7, Tuesday’s intraday high, opening round number resistance at $4200.0.
• Silver has unwound a large share of Tuesday’s losses with the metal up 1.4% to $52.17 today after a high of $52.221, holding below resistance at $52.386. It began to correct yesterday on expectations of the London market normalising in coming weeks after liquidity issues.
• Silver is also nervous about US import duties if a review finds that it is a critical mineral.
• Risk appetite has improved with stronger equities and AUD. The S&P e-mini is up 0.2%, Hang Seng +1.3% but CSI 300 flat. Oil prices are slightly lower with WTI -0.2% to $58.60/bbl. Copper is down 0.2%.
• Later the Fed’s Miran, Waller and Schmid speak and the Beige book is released. The ECB’s de Guindos, Buch and Donnery, and BoE’s Breeden and Ramsden also appear. US October Empire manufacturing and August euro area IP print.

• China bond futures have done very little today following a second consecutive day of modest liquidity provision during the morning's open market operations.  
• The 10-Yr future is down -0.01 at 108.18 as it remains near to the 100-day EMA
• The 2-YR future is down -0.02 at 102.36 to move back below the 20-day EMA of 102.37
• The bond market continues to grind lower in yield with the CGB 10-Yr back at near term lows of 1.83%.  It has traded in a tight range of 1.80% - 1.90% for some months, looking for a catalyst to break out.  Equity strength and significant regional and central government bond issuance has not put upward pressure on yields despite the PBOC purchase program remaining on hold.  
• Next week's GDP may shed light on the next steps for policy, particularly should forecasts prove correct with a moderation in 3Q from 2Q 

• 

The Japanese Ministry of Finance (MOF) sells Y600.3bn 20-Year JGBs:

• Average Yield: 2.674% (prev. 2.654%)
• Average Price: 100.33 (prev. 98.00)
• High Yield: 2.684% (prev. 2.662%)
• Low price: 100.20 (prev. 97.90)
• % Allotted At High Yield: 9.6410% (prev. 98.6020%)
• Bid/Cover: 3.56 (prev. 3.9974x)