FOREX: AUD Crosses - AUD Trades Heavy Against The GBP & EUR
US Equities stormed to new all-time highs in the N/Y session as the market gears up for a potential series of rate cuts. This morning US futures have opened pretty muted though still near their highs, ESU5 -0.10%, NQU5 -0.05%. The AUD performance has been mixed in the crosses with underperformance in GBP/AUD the standout.
- EUR/AUD - Overnight range 1.7856 - 1.7922, Asia is currently trading around 1.7915. The direction US stocks ultimately decide on following will ultimately have a direct impact on the direction of this pair. It is currently comfortable in the middle of its 1.7650/1.8050 range, but with price having based on multiple occasions towards 1.7800 it could be building for a retest of the highs.
- GBP/AUD - Overnight range 2.0594 - 2.0659, Asia is trading around 2.0610. The pair continues to find good demand towards the lower end of its 2.0400 - 2.1050 range; it has bounced nicely to move back into the middle of its wider range. I would suspect some sellers initially around this 2.0750/2.0800 pivot but a sustained move through this area would see the focus return back to the 2.1000 area.
- AUD/JPY - Overnight range 96.22 - 96.69, Asia is trading around 96.45. The pair has bounced and is testing its first resistance around the 96.50/97.00 area. There should be sellers around here initially, a sustained break below 94.50/95.00 is needed to signal a deeper move lower or a break above 97.50 though would negate this and would reinstate the momentum higher.
- AUD/NZD - Overnight range 1.0952 - 1.0969, the cross is dealing in Asia around 1.0965. The Cross continues to trade sideways after stalling towards the 1.1000 area once more. The range looks to be 1.0850-1.1000 for now.
Fig 1: GBP/AUD spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USD: BBDXY - Stalling Around 1200, Can It Break Through
The BBDXY range overnight was 1197.92 - 1201.02, Asia is currently trading around 1199. The BBDXY once again found decent supply capping the 1200 area. Price action is interesting though in that the price is not violently moving lower from these bouts of strength as did in the past. The price does look stretched and the market is short so a correction is not out of the question. The larger picture though still remains one of USD weakness and in the current environment rallies should continue to be met with supply, first resistance is back towards the 1205/1215 area, a sustained break above 1220 would be needed to begin challenging the shorts conviction.
- Bob Elliott on X: “Many of the dynamics that drove the dollar to secular highs are reversing. That doesn't mean a collapse is coming, but instead a likely long-term readjustment that has only just gotten started.”
- Daily Chartbook on X: "The USD-S&P correlation has turned positive ... Positive correlation could be just a temporary reflection of the post-Liberation Day market action ... However, if this trend were to persist, it could be a sign of USD losing its safe-haven characteristics. - Andrea Cicione, TS Lombard". See Graph Below.
- Lance Roberts on X: “There has been a lot of talk about the demise of the dollar, even though it still comprises 58% of foreign reserves. However, one thing that could change that is the rise of stablecoins, where 99% of all stablecoins are pegged to the dollar. If the world goes digital, as expected, the dollar may be the dominant reserve.”
There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows. This consensus will also result in some decent short squeezes as a lot of the market is positioned the same way.
Fig 1: USD - S&P Correlation
Source: MNI/@dailychartbook/TSLombard
MNI: CHINA PBOC CONDUCTS CNY226.2 BLN VIA 7-DAY REVERSE REPO MON
- CHINA PBOC CONDUCTS CNY226.2 BLN VIA 7-DAY REVERSE REPO MON
CHINA SETS YUAN CENTRAL PARITY AT 7.1491 MON VS 7.1475
- CHINA SETS YUAN CENTRAL PARITY AT 7.1491 MON VS 7.1475
