GOLD: Bearish Momentum Remains, Steadies Above $5,000

The USD/JPY range today has been 157.52 - 158.20 in the Asia-Pac session, it is currently trading around {USDJPY Curncy}. USD/JPY tried lower in our session but again found solid demand on the dips back toward 157.50. The BOJ is in a tough spot, and they are going to need to do something significant to turn around the market's perception of a weak Yen. A test of the BOJ/MOF resolve looks inevitable at the moment as the market moves its focus back toward the important 160.00 area. USD/JPY remains in an uptrend and while the support back toward the 154.00-155.00 area is intact it remains a buy on dips. On the day, I suspect dips back toward the 157.00 area could now continue to be supported initially as the market looks to build on this momentum. I suspect we get more official jaw-boning as we approach 160 and any move above there would dramatically increase the chances of them getting involved.

• "TRUMP DENIES INVOLVEMENT IN DOJ'S FED SUBPOENAS, TRUMP SAYS DOJ SUBPOENAS NOTHING TO DO WITH INTEREST RATES: NBC”
• "JAPAN TAKAICHI CABINET APPROVAL RATING UP 2.3PT TO 78.1%: JNN"  :  BBG
• CFTC Data of last week shows Asset Managers continue to pare back their JPY longs, +47852(Last +54818). The Leveraged community reduced their own shorts that had started to become quite large, -68117(Last -79265).
• Options : Close significant option expiries for NY cut, based on DTCC data: 156.70($609m), 157.00($872m), 158.00($1.45b). Upcoming Close Strikes : 159.00($949m Jan 15) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 72 Points

Fig 1 : JPY CFTC Data

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

• China's bond futures are modestly higher Monday following a small injection of liquidity during this morning's OMO.  The maturity schedule for 7-day OMO is modest this week, following last week's CNY1.6tn liquidity withdrawal.  
• Risk sentiment is off to a good start this week with all major bourses higher, dragging bond futures up too.  
• The 10-yr is up +.05 to 107.825, near to the topside resistance from the 20-day EMA of 107.90.
• The 2-Yr is up +.01 to 102.356, retaining its position below all major moving averages.  Topside resistance from the 20-day EMA is at 102.41.
• Cash is stable to slightly lower in yield with the 10-Yr at 1.866% (-0.5bps today).
• China is selling CNY135bn of 2027 and CNY32bn of 2056 bonds this week.  

The AUD/USD has had a range today of 0.6678 - 0.6707 in the Asia- Pac session, it is currently trading around {AUDUSD Curncy}. The AUD poked its head above 0.6700 in Asia as the USD had a knee-jerk lower on the FED news. The AUD price action had been lagging the general bounce seen in the USD to start the year, the 0.6650 area continues to provide support and has seen the AUD outperform in the crosses. A break below this area is needed to see it play catch up in the short-term. Technically though while the AUD remains above 0.6550-0.6600 it should continue to find support on dips. On the day, I will be watching to see if this slide lower in the USD has more to go, a sustained push back above 0.5710-0.5730 could see the upward momentum reestablished.

• MNI AU -- Nov Spending Above Forecasts, Reflecting Broad Based Strength: Earlier data showed stronger than expected Nov household spending figures. This series has replaced the retail sales print as the main monthly indicator for household spending trends in Australia. We were up 1.0%m/m (0.6% forecast), while the Oct outcome is now +1.4% (versus the initial 1.3% reported). In y/y terms, spending rose 6.3% (versus 5.5% forecast and 5.7% prior).The spending data may add a little to the RBA hike case for 2026, although inflation data is likely to remain the key swing factor. Other data for ANZ job ads showed a -0.5%m/m for Dec, after a revised -1.5% fall in Oct.
• "AUSTRALIA RESOURCES MINISTER KING: CRITICAL MINERALS RESERVE WILL BE OPERATIONAL BY END OF THIS YEAR - [RTRS]"
• CFTC Data last week shows Asset managers slightly reduced their shorts, -31901(Last -33138). The Leveraged community has been building a decent long coming into the new year and continues to add to it, +33775(Last +32268).
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6660(AUD360m), 0.6725(AUD597m), 0.6580(AUD578m). Upcoming Close Strikes : 0.6700(AUD962m Jan13), 0.6700(AUD625m Jan14), 0.6750(AUD911m Jan14) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 35 Points

Fig 1: AUD CFTC Data

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