FOREX: AUD Crosses - A Short Market Is Being Challenged

The AUD found decent demand sub 0.6400 on its initial look down there. This morning risk has gapped higher on the positive US-China meeting over the weekend. The S&P is up 1.25% this morning, can this be sustained without any actual details of what a trade deal would look like ? For now though the AUD is benefitting across the board and gapped higher on the crosses in early trading.

• EUR/AUD - Friday night range 1.7524 - 1.7584, Asia is trading around 1.7510. EUR/AUD gapped 150 points lower on the open to touch 1.7400 in early trade, decent demand was again seen down there and the pair has since bounced back, sellers likely to remerge back towards 1.7700.
• GBP/AUD - Friday night range 2.0663 - 2.0766, Asia is trading around 2.0705. GBP/AUD gapped 100 points lower on the open to around 2.0630 in early trade before rebounding. Good demand has seen the pair fail twice now below 2.0500 putting in a double bottom. The 2.0700/2.0800 area found good supply again on Friday night. A break back above 2.0800 is needed to signal a base is potentially in and the uptrend is set to resume first target 2.1000.
• AUD/JPY - Friday night range 92.82 - 93.33, Asia is trading around 93.60. AUD/JPY gapped around 80 points higher in early trade, it has since found some supply towards 0.6400 again and retraced. While the support around 92.00 holds, price is likely to continue testing the Weekly resistance seen between 94.00/96.00 where sellers should remerge.
• AUD/NZD -  Friday night range 1.0839 - 1.0871, the cross is dealing in Asia around 1.0845. Sellers continue to provide headwinds for the cross, a move back above 1.0900 would negate the bearish trend.

Fig 1: AUD/JPY spot Daily Chart

Source: MNI - Market News/Bloomberg

Japan's March trade balance and current account figures were close to market expectations. The trade balance printing at ¥516.5bn, versus ¥547.7bn forecast. The Feb balance was ¥712.9bn. In seasonally adjusted terms, the current account was ¥2723.1bn, slightly above forecasts, while in unadjusted terms we printed, ¥3678.1bn, slightly below market expectations. 

• The trade balance sits just off recent cycle highs, presenting less of a headwind to yen, all else equal. This is also consistent with improvement in the Citi Japan terms of trade proxy, although this measure is still in negative territory.
• it's a similar backdrop in terms of the current account trend, although we have also seen improvement in the income balance in the past 6 months, which along with the trade side, has aided the current account balance. 

TYM5 is trading 110-17, down 0-09 from its close. 

• The US 2-year yield opens around 3.924%, up 0.03 from its close.
• The US 10-year yield opens around 4.408%, up 0.03 from its close
• Yields have all moved higher this morning as risk bounces on US-China officials citing 'substantial progress' made from weekend trade talks held in Switzerland.
• Traders continue to pare back expectations of the Fed easing this year and the next.
• “Treasury Secretary Scott Bessent told US lawmakers that the department's ability to use special accounting maneuvers to stay within the federal debt limit could be exhausted in August.”(BBG)
• “Bessent urged Congress to increase or suspend the debt limit by mid-July to protect the full faith and credit of the United States.”(BBG)
• The 10-year Yield range seems to be 4.10% - 4.5%, price has bounced nicely off the 4.25/30 support, target back towards the top end of the range 4.45/50%.
• Data: US CPI Tomorrow