AUDNZD: AUD/NZD Remains Rangebound, AU Data Out Shortly

Aussie outperformed on Monday following the release of China’s Politburo statement on the economy which indicated a “moderate loosening” of monetary policy, the first adjustment since 2011. As a result AUDUSD jumped from around 0.6380 to reach a high of 0.6471. It has now eased to 0.6436 to be up 0.7%. The USD index rose 0.15%.

• AUDUSD is still down 1.1% in December despite yesterday’s rally and the trend remains bearish. Initial support is at 0.6373, 6 December low.
• USDJPY rose 0.8% to 151.23, close to pre-US election levels. A bear cycle in the pair remains intact with initial resistance close at 151.20, 50-day EMA. It was breached earlier when it rose to a high of 151.35.
• The yen’s underperformance left AUDJPY 1.5% higher at 97.32 following a peak of 97.80, the highest since December 2.
• Kiwi also did well with the pickup in risk appetite with NZDUSD rising 0.6% to 0.5864. Ahead of today’s RBA decision, AUDNZD is up 0.2% to 1.0978 after testing 1.10.
• Equities were mixed with the S&P down 0.6% but Euro stoxx is up 0.2%. Oil prices are higher with Brent up 1.1% to $71.91/bbl. Copper rose 1.5% and iron ore is up to $106-107/t.
• The RBA is widely expected to leave rates unchanged at 4.35% today. The decision is announced at 1430 AEDT and Governor Bullock’s press conference is at 1530 AEDT. 

Our preview of November's CPI report has just been published - PLEASE FIND THE FULL REPORT HERE: USCPIPrevDec2024.pdf

• Analysts’ forecasts for November CPI imply remarkably steady sequential inflation versus October, with the MNI median and average for core expected to show an unchanged 0.28% M/M.
• Combined with Thursday’s estimates for PPI inputs, core PCE is in turn seen moderating to between 0.18-0.25% M/M in November, vs 0.27% in October.
• Headline inflation is seen picking up slightly, to 0.27% (median) from 0.24% prior, with both food and energy prices accelerating slightly on a sequential basis.
• On an annual basis, that means steady Y/Y core (3.3%), with a modest uptick in headline (2.7% vs 2.6%).
• Following a largely in-line November Employment report, and particularly a 4-month high unemployment rate (4.25%), the bar to a pause at the December FOMC meeting is set high. There would have to be an extremely strong CPI reading to see a pause back on the table.
• An in-line CPI report, even an above-consensus one that is driven by upside surprises in volatile components (eg airfares), would keep the Fed on track to cut by 25bp that is over 80% implied by futures. However, this inflation round will have implications for 2025 rate guidance, as well as the latest set of FOMC quarterly projections. 

• RES 4: 1.4327 2.0% 10-dma envelope  
• RES 3: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 2: 1.4196 1.764 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 1: 1.4178 High Nov 26 and the bull trigger
• PRICE: 1.4122 @ 16:25 GMT Dec 9
• SUP 1: 1.4012/3928 20-day EMA / Low Nov 25 and a key support  
• SUP 2: 1.3902 50-day EMA
• SUP 3: 1.3822 Low Nov 6
• SUP 4: 1.3747 Low Oct 17

The trend condition in USDCAD remains bullish and Friday’s strong rally reinforces this theme. The bull trigger is 1.4178, the Nov 26 high. A break of this hurdle would confirm a resumption of the primary uptrend and mark an extension of the bullish price sequence of higher highs and higher lows. Sights are on 1.4196 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low.