AUD: AUD/USD - Continues To Hold Above 0.6600
The AUD/USD has had a range today of 0.6608 - 0.6622 in the Asia- Pac session, it is currently trading around {AUDUSD Curncy}. The AUD continues to consolidate above 0.6600. The AUD price action for the moment remains consolidative, but I do remain wary of what seems to be happening in US stocks, let's see if this bounce can extend from here. Technically while the AUD remains above 0.6500-0.6550 dips should continue to be supported. In the Asian session, watch to see if this 0.6590-0.6600 area can continue to hold, if not we could see a deeper pullback towards the 0.6500-50 support. On the day I suspect a break back above 0.6635 area could see the AUD target the 0.6660-80 resistance.
- MNI AU - The AU-US 10yr spread is around +60bps, so holding the bulk of its gains since late Nov, when this spread broke higher. The bias is likely to remain for higher spreads in AU's favor given the relative central bank outlooks into the first part of 2026.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6675(AUD1.31b), 0.6700(AUD1.57b). Upcoming Close Strikes : 0.6475(AUD599m Dec 23), 0.6550(AUD629m Dec 22), 0.6600(AUD557m Dec 23) - BBG
- The AUD/USD Average True Range for the last 10 Trading days: 40 Points
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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INDONESIA: Q4 Activity Data Better But Still Soft Spots
Bank Indonesia’s decision is announced today and 29/35 analysts on Bloomberg expect rates held at 4.75% (see MNI BI Preview). However, recently it has gone against consensus. In October, it held when it was forecast to ease. With inflation firmly within its band, BI is likely to focus on broad-based rupiah weakening but also the limited pass through of 2025’s 125bp of easing to lending rates. Its three consecutive cuts in Q3 and statements that it would support government policy, which is expansionary, signalled a shift to a pro-growth stance.
- Trade and survey data since the October meeting have signalled stronger Q4 growth to date but the details show some weakness such as soft imports, wages and foreign orders.
- Q3 GDP slowed slightly to 5.0% y/y from 5.1% driven by weaker investment but was supported by a pickup in government spending. BI expects 2026 GDP to rise to 5.3% and said that it will continue to support the government’s pro-growth measures.
- Q3 consumption slowed marginally to 4.9% y/y from 5.0% but consumer sentiment fell 1.9% q/q. It rebounded in October to 121.2 from 115.0 despite Q3 manufacturing wages rising only 0.7% y/y after Q1’s 2.1%.
- October S&P Global manufacturing PMI rose to 51.2 after averaging 50.4 in Q3 driven by stronger domestic orders and associated increase in hiring. However, it underperformed ASEAN.
Indonesia activity outlook
Source: MNI - Market News/LSEG/Bloomberg Finance L.P.
- Robust merchandise export growth at 11.4% y/y drove the September 3-month average trade surplus to its highest since December 2022. Shipments to China, US, Europe, Singapore and Thailand have been strong but weak to Japan, India and Australia.
- However, 3-month average import growth fell 1.7% y/y, a sign of soft domestic demand.
- Tourist arrivals are also slowing but still rose 9.6% y/y 3-month average in September but down from 20.7% a year ago.
Indonesia merchandise exports vs imports y/y% 3-mth moving average
Source: MNI - Market News/LSEG
JGBS AUCTION: Poor Demand Metrics For 20Y Auction
The 20-year JGB auction delivered weak results across key metrics. The low-price underperformed dealer forecasts, which were set at 98.60 according to a Bloomberg poll. Moreover, the cover ratio dropped to 3.2825x from 3.5599x in the previous outing, and the auction tail lengthened sharply to 0.31 from 0.10.
- As noted in the auction preview, today’s offering featured an outright yield at its cycle high, 10-15bps above last month’s level.
- Moreover, the 10/20 yield curve remained near its recent high, its steepest since 1999.
- Accordingly, this result aligns with the lacklustre performance observed in the 30-year JGB auction earlier this month.
- Post-auction, the 20-year JGB is ~1bp cheaper.
Source: Bloomberg Finance LP
JGBS AUCTION: 20-Year JGB Auction Results
The Japanese Ministry of Finance (MOF) sells Y600.7bn 20-Year JGBs:
- Average Yield (%): 2.809 (prev. 2.674)
- Average Price: 98.61 (prev. 100.33)
- High Yield (%): 2.833 (prev. 2.684)
- Low price: 98.30 (prev. 100.20)
- % Allotted At High Yield (%): 64.9769 (prev. 9.6410)
- Bid/Cover: 3.2825x (prev. 3.5599x)
