AUD: AUD/USD - Fails Above 0.6700 At First Attempt
The AUD/USD had a range overnight of 0.6641-0.6707, Asia is trading around 0.6650. US stocks ended a little lower after the FOMC and the USD bounced as the Fed could not reach the levels of dovishness the market had been pricing in. The AUD move higher failed towards 0.6700 as the USD found some relief. Do we see a further short-term retracement in the USD, if so I suspect the reprieve is temporary. The price action in the AUD/USD suggests dips will be supported for now with the first buy-zone back towards the 0.6550 area. A retest of the 0.6700 area at some point seems to be a question of timing.
- MNI AU: Unchanged Unemployment Rate Expected today, Analysts Split. August labour market data are released on Thursday and remain a point of focus. Employment is forecast to rise 21k after July’s +24.5k with the unemployment rate expected to remain at 4.2%. It will also be important to monitor underemployment, the split between full-time & part-time and hours worked. The RBA is currently expected to leave rates unchanged on September 30 as it waits for Q3 CPI on October 29.
- Bloomberg - “Abu Dhabi’s XRG Walks Away From $19 Billion Santo Takeover: This was due to a “combination of factors” including disagreement over valuation and tax.”
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD1.13b), 0.6650(AUD774m). Upcoming Close Strikes : 0.6650(AUD906m Sept 23), 0.6750(AUD1.16b Sept 19) - BBG
- Data/Event: Unemployment
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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POLITICAL RISK: Trump Says Planning Underway For Zelenskyy/Putin Meeting
US President Trump has posted via Truth Social, indicating planning is underway for a meeting between Ukraine President Zelenskyy and Russian President Putin, after which there would be a meeting between the two Presidents as well as US President Trump. Trump stated that this was a very good, early step towards ending the Ukraine-Russia conflict. Trump's post followed meetings with key EU leaders and the Ukraine President in the White House. The full Truth Social post is below.
""I had a very good meeting with distinguished guests, President Volodymyr Zelenskyy, of Ukraine, President Emmanuel Macron, of France, President Alexander Stubb, of Finland, Prime Minister Giorgia Meloni, of Italy, Prime Minister Keir Starmer, of the United Kingdom, Chancellor of the Federal Republic of Germany, Friedrich Merz, President of the European Commission, Ursula von der Leyen, and Secretary General of NATO, Mark Rutte, in the White House, which ended in a further meeting in the Oval Office. During the meeting we discussed Security Guarantees for Ukraine, which Guarantees would be provided by the various European Countries, with a coordination with the United States of America. Everyone is very happy about the possibility of PEACE for Russia/Ukraine. At the conclusion of the meetings, I called President Putin, and began the arrangements for a meeting, at a location to be determined, between President Putin and President Zelenskyy. After that meeting takes place, we will have a Trilat, which would be the two Presidents, plus myself. Again, this was a very good, early step for a War that has been going on for almost four years. Vice President JD Vance, Secretary of State Marco Rubio, and Special Envoy Steve Witkoff, are coordinating with Russia and Ukraine. Thank you for your attention to this matter!"
US 10YR FUTURE TECHS: (U5) Follows Fade in Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.670 @ 16:17 BST Aug 18
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures faded into the Monday close, with softer US Treasuries weighing on global fixed income. This opens further the gap with the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
US TSYS: Yields Extend Higher Looking Towards Jackson Hole
TYU5 reopens at 111-18, up 0-01+ from closing levels in today’s Asia-Pac session.
- Overnight the US 10-year yield had a range of 4.22868% - 4.3511%, closing around 4.334%.
- Treasury yields extended higher overnight; led by the long-end which saw the yield curve steepen(2s10s +0.52 at 56.852, 5s30s +0.49 at 108.523).
- (Bloomberg) -- US Treasuries slipped for a third day ahead of a speech by Jerome Powell later this week that traders will monitor for signals on whether the Federal Reserve is poised to cut interest rates. Gennadiy Goldberg, head of US rates strategy at TD Securities, says "The big risk for markets is if he sounds very non-committal" regarding Powell's speech, and notes that markets are trading as if a rate cut is secured.
- MNI US DATA: Homebuilder Sentiment Still Historically Weak, Boding Ill For Activity. August's NAHB/Wells Fargo Housing Market report showed little improvement in the homebuilding sector, with present sales weakening modestly and selling prospects steady/moderately better. The headline index fell 1 point to 32 - reverting back to June's level which is around post-2022 lows, and dashing consensus expectations for a slight improvement to 34. Likewise, present sales reverted 1 point to June levels (35).
- Yields extended higher overnight, probing the pivotal resistance area within the greater 4.10%-4.65% range. The 4.35% area in 10-Year yields should still see demand initially, but the way the market keeps bouncing off levels just below 4.20% will be disconcerting for longs.
Fig 1: 10-Year US Yield 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
