AUD: AUD/USD - Trades Heavy Into Jackson Hole

TYU5 reopens at 111-04, down 0-02 from closing levels in today’s Asia-Pac session.

• Overnight the US 10-year yield had a range of 4.3499% - 4.4215%, closing around 4.377%. 
• Treasury yields ended broadly lower overnight; led by the long-end which saw the yields curve flatten(2s10s -2.93 at 51.287, 5s30s -1.46 at 102.453).
• FED: MNI INTERVIEW: Powell Would Win In Court If Trump Fires Him. Federal Reserve Chair Jerome Powell would likely prevail in court and get to serve out his term even if President Donald Trump goes through with threats of firing him, former Fed lawyer Cornelius Hurley told MNI. “Powell has said he’s not going. He would go immediately to court and ask for an injunction or restraining order or stay on the executive order, or however Trump articulated that action, and I think it's a high probability that the court would grant that stay,” said Hurley.
• US DATA: Leading Economic Indicators Continue To Point To Weak Industrial Growth. June's Conference Board US Leading Economic Index (LEI) fell by 0.3% M/M as expected in June, pulling back from 0.0% prior (upward rev from -0.1%). This index has been negative the vast majority of the time for the last few years despite solid economic growth measured by GDP, so we take its signal of outright economic dynamics with some skepticism.
• The 10-year yield has moved back towards its pivot within the wider range 4.10% - 4.65%, expect supply around 4.35% first up.

Fig 1: 10-Year US Yield 120min Chart

Source: MNI - Market News/Bloomberg Finance L.P

The AUD/USD had a range overnight of 0.6506- 0.6538, Asia is trading around 0.6525. The pair drifted higher as the USD came back under pressure with US yields pushing lower. The follow through below 0.6500 was quite disappointing for AUD shorts but with Stocks making new highs and risk outperforming, it makes it a hard environment for AUD/USD to collapse in. The Pair looks to be consolidating in a 0.6450 - 0.6600 range as the market awaits a catalyst to provide clearer direction.

• (Bloomberg) -- Australia will begin publishing a complete monthly measure of inflation from Nov. 26, addressing a long-standing gap in the nation’s economic data.
• “US inbound container volume fell for a second month in June, a private gauge showed, putting the indicator on course for one of the sharpest year-on-year reversals amid tariff disruptions. Spot rates for containers from China have fallen for five straight weeks, according to Drewry.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD596m), 0.6500(AUD496m) . Upcoming Close Strikes : none - BBG
• CFTC Data shows Asset managers have maintained their shorts -38267, the Leveraged community added slightly to their shorts to -20048.
• Data/Event: RBA Minutes

Fig 1: AUD/USD spot 120min Chart

Source: MNI - Market News/Bloomberg Finance L.P

Spot USD/CNH sits near 7.1715 in early Tuesday dealings, after CNH gained 0.14% for Monday's session. Broader USD sentiment faltered, the BBDXY off around 0.50%, while the DXY fell close to 0.65%. Spot USD/CNY finished up at 7.1694, while the CNY CFETS basket tracker edged down a little to 96.10 (per BBG). 

• USD/CNH technicals are broadly unchanged. There may be some focus on whether we can sustain sub 7.1700 level in the near term, but greater focus is likely to rest on potential support at the low 7.1500 area, which marked recent lows. On the topside the 50-day EMA resistance point remains intact, near 7.1910 currently.
• The USD suffered amid a pull back in US Tsy yields. We are off recent highs (the 10yr back to 4.38%), which pushed US-CH yield differentials lower. China's 10yr bond yield edged a touched higher yesterday, as China announced approval of a large scale dam project. Still, US-CH yield differentials remain within recent ranges, with the US leg likely to remain the dominant driver.
• In the equity space, positive trends continued, the CSI 300 index finishing close to 4086, fresh closing highs YTD. The Golden Dragon Index did lose a little ground in US trade for Monday, down 0.28%.
• US Tsy Secretary Bessent stated that the next round of talks with China officials may move beyond US-China trade and include China purchases of oil from Russia and Iran (per a CNBC interview).
• Elsewhere our China policy team noted: "European Commission President Ursula von der Leyen will warn Chinese Premier Li Qiang at a one-day summit in Beijing on July 24 that the state of trade relations is "unsustainable,” raising issues of China's industrial overcapacity, as well as lack of market access and free and fair competition, the official said."