US INFLATION: BEA To Average Sep / Nov CPI For October PCE

• RES 4: 1.4140 High Nov 5 and a key resistance   
• RES 3: 1.4051 High Nov 28 
• RES 2: 1.3939/3997 Low Nov 28 / 20-day EMA  
• RES 1: 1.3888 Low Oct 29  
• PRICE: 1.3847 @ 16:45 GMT Dec 8
• SUP 1: 1.3800 Low Dec 08
• SUP 2: 1.3769 61.8% retracement of the Jun 16 - Nov 6 bull cycle
• SUP 3: 1.3727 |Low Sep17 
• SUP 4: 1.3682 76.4% retracement of the Jun 16 - Nov 6 bull cycle  

A bear theme in USDCAD remains intact and Friday’s strong sell-off reinforces current conditions. The pair has breached an important support at 1.3946, the base of a bull channel drawn from the Jul 23 low. The break highlights a stronger bear cycle and signals scope for an extension towards 1.3769 next, a Fibonacci retracement point. Initial firm resistance to watch is 1.3997, 20-day EMA.

The AUD/USD had a range overnight of 0.6614-0.6646, Asia is trading around 0.6620. The AUD stalled toward the 0.6650 area and was unable to hold above the 0.6630 break. US yields continue to rise as we approach the FOMC and Equities have slipped a little in response. The AUD price action remains very constructive but it could not ignore the pullback in the USD. While the AUD remains above 0.6500-0.6550 I suspect dips should continue to be supported. In the Asian session, the main focus will be on the RBA today with the market looking for any hawkish confirmation. It has come a long way very quickly so a pullback is not out of the question, first support is toward 0.6570/90 where we should see demand reappear. Ultimately the AUD is looking to rebuild momentum to have another look back toward the 0.6700 area at some point. 

• MNI RBA Preview - With October trimmed mean inflation printing at 3.3%, the RBA is unanimously expected to be on hold at its December meeting. The strength of the data since the November meeting plus inflation rising further above the top of the band increases the chance that the RBA now sees risks skewed to the upside and as a result it may sound more hawkish and at a minimum will remain “cautious”. 
• RBA-dated OIS pricing is showing the probability of a 25bp hike rising from 2% today to 105% by August and 141% by December 2026.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6630(AUD621m), 0.6635(AUD714m). Upcoming Close Strikes : 0.6550(AUD1.59b Dec 11) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 39 Points
• Data/Event: NAB Business Confidence, RBA

Fig 1: AUD/USD spot Daily Chart

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