FOREX: AUD and NZD Plummet, USDCAD Keeps Win Streak Alive
- The turn lower for US equity indices just ahead of the cash open, and the subsequent significant selloff towards yesterday’s lows, has contributed to the notable weakness for the likes of AUD and NZD in G10 FX. AUDJPY and NZDJPY are now tracking 1.25% in the red as the combination of dampened risk sentiment and declining core yields weighs heavily on these crosses. AUDJPY has not closed below its 50-day EMA since August 22, and therefore a close below 98.50 will be closely eyed.
- Although CAD losses are of a smaller magnitude, USDCAD has notably risen back to an important level on the chart, the top of the bull channel, drawn from the July 23 low.
- The pair is now on a 6-session winning streak, currently trading at the highest level since April 9th. Topside momentum has gained traction, with domestic developments around the budget assisting the move above 1.41.
- This week’s extension for USDCAD highlights a clear reversal of the corrective bear leg between Oct 14 - 29. 1.4167 is the next level of note, the 50.0% retracement of the Feb 3 - Jun 16 bear leg, and above here, attention will be on 1.4274, the April 09 high.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: Jeffries Rules Out 1-Year Obamacare Extension Ahead Of 7th Govt Funding Vote
Laura Weiss at Punchbowl News reporting that House Minority Leader Hakeem Jeffries (D-NY) has called a potential one-year extension for enhanced Obamacare subsidies a “non-starter”. Comes after Punchbowl reported that Senator Mike Rounds (R-SD) “has talked about doing a one-year clean extension and then a second year with reforms/phase-outs. But this is by no means a majority view among Senate Republicans, and certainly not House Republicans.”
- Jeffries' comments may cause some discomfort for Senate Minority Leader Chuck Schumer (D-NY), who has declined to outline his specific demands for supplying votes to the Republican funding measure, and is likely searching for an offramp to the ongoing government shutdown.
- Schumer is cognizant that Republicans are highly unlikely to agree to Democrats’ central ask for a permanent extension to the ACA subsidies, with a short-term extension likely the best route to resolving the current standoff. Weiss notes that, “Several House Dems back a bipartisan bill for a 1-year extension. [Rep Tom] Suozzi [D-NY] is co-lead.”
- Senate Majority Leader John Thune (R-SD) is expected to hold a seventh vote on the House-passed November 21 funding bill (and Democrat alternative) at some point this evening. Both bills are expected to fail again.
US TSYS/SUPPLY: Preview 3Y Note Auction
Tsy futures are extending highs (TUZ5 104-07.88, +1.38; TUZ5 112-22 +9.5) ahead of the $58B 3Y note auction (91282CPC9) at 1300ET, WI is currently at 3.585%, 10bp cheap to last month's stop. Results will be available shortly after the competitive auctions closes at 1300ET.
- September auction recap: Treasury futures remained weaker but pared losses after $58B 3Y note auction (91282CNY3) stopped through: drawing 3.485% high yield vs. 3.492% WI; 2.73x bid-to-cover vs. 2.53x prior.
- Peripheral stats saw indirect take-up climbed to 74.24% vs. 53.99% prior; direct bidder take-up retreated to 17.39% from 28.13% prior; primary dealer take-up 8.37% vs. 17.88% prior.
US 10YR FUTURE TECHS: (Z5) Testing Support At The 50-Day EMA
- RES 4: 114-10 High Apr 7 (cont.)
- RES 3: 114-00 Round number resistance
- RES 2: 113-12/29 High Sep 18 / High Sep 11 and the bull trigger
- RES 1: 113-00 High Sep 24
- PRICE: 112-22 @ 17:12 BST Oct 7
- SUP 1: 112-12+/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg
- SUP 2: 111-26 Low Aug 26
- SUP 3: 111-13+ Low Aug 18 and a key support
- SUP 4: 111-01+ 76.4% retracement of the Jul 15 - Sep 11 bull phase
Treasuries continue to trade below last week’s high print of 112-31+ (Oct 3). Attention is on support at the 50-day EMA, at 112-12+. It has recently been pierced but for now remains intact. A clear break of it would undermine a bull theme and signal scope for a deeper retracement towards 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high. A break would be bullish.
