AUDUSD TECHS: Bulls Remain In The Driver’s Seat
- RES 4: 0.6739 High Jul 31
- RES 3: 0.6713/6723 3.0% 10-dma envelope / High Aug 1
- RES 2: 0.6687 2.0% 10-dma envelope
- RES 1: 0.6666 High Nov 28
- PRICE: 0.6663 @ 17:05 GMT Nov 28
- SUP 1: 0.6491 20-day EMA
- SUP 2: 0.6453/6339 50-day EMA / Low Nov 10
- SUP 3: 0.6315 Low Oct 31
- SUP 4: 0.6270 Low Oct 26 nand the bear trigger
AUDUSD traded higher again Tuesday, topping resistance at 0.6632 and 0.6656 in the process. This firms the recent rally after the clear break of former resistance at 0.6522, the Aug 30 and Sep 1 high. This breach reinforced the bullish theme and signals scope for a continuation higher near-term towards 0.6687, the 2.0% 10-dma envelope. Initial firm support is at 0.6453, the 50-day EMA.
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USDCAD TECHS: Bullish Trend Structure
- RES 4: 1.4070 1.236 proj of the Sep 19 - Oct 5 - Oct 10 price swing
- RES 3: 1.3987 2.0% 10-dma envelope
- RES 2: 1.3977 High Oct 13 2022 and a major resistance
- RES 1: 1.3866 High Oct 27
- PRICE: 1.3858 @ 15:57 BST Oct 27
- SUP 1: 1.3681/3595 20- and 50-day EMA values
- SUP 2: 1.3477 76.4% retracement of the Sep 19 - Oct 5 rally
- SUP 3: 1.3417 Low Sep 29
- SUP 4: 1.3381 Low Sep 19 and a key support
The USDCAD bullish trend condition strengthened further Friday, with the pair topping key resistance at the Mar 10 high of 1.3862. This week’s climb was triggered by a break of key resistance at 1.3786, the Oct 5 high. This strengthened bullish conditions to confirm a resumption of the uptrend. Friday’s bullish break confirms 1.3977 as the next key upside level, marking the Oct 13 2022 high. Moving average studies are in a bull-mode position too, highlighting an uptrend. On the downside, initial firm support is seen at 1.3681, the 20-day EMA.
US TSYS: Unwinding Risk Ahead Weekend Tsys Extending Highs
- Geopol risk over the weekend saw curves twisted steeper during the second half, short end started outperforming around the time Israeli military spokesman headlines made the rounds: "ISRAELI ARMY SAYS GROUND FORCES EXPANDING ACTIVITY IN GAZA: AP".
- Current Dec'23 2Y futures trade 101-11 (+1.88) while 10Y trades 106-15.5 (+4.5) with initial technical resistance at 106-29 (20-day EMA); 10Y yield -.0099 at 4.8346%, 2Y10Y +2.120 at -17.584.
- Early support in equities evaporated on the headlines as well, longs squaring ahead the weekend (SPX Eminis currently -29.5 at 4125.50).
- Brief two-way reported after Personal Income came in a little lower than expected (0.3% vs. 0.4% est, 0.4% prior), Personal Spending firmer (0.7% vs 0.5% exp, 0.4% prior). PCE deflator's in line: MoM (0.4% vs. 0.3% est, 0.4% prior); YoY (3.4% vs. 3.4% est, 3.4% prior/rev).
- Fast two-way noted Tsys pared gains then rebound after higher than expected UofMich 1Y inflation figure at 4.2% vs. 3.8% est (3.8% prior), 5Y in-line with exp at 3.0%.
- Quiet start to the week ahead, main focus on Wednesday afternoon's FOMC policy annc, ADP private employment data early Wednesday and Non-Farm payrolls next Friday. US Treasury's quarterly borrowing estimates on Monday.
US TSYS: Late SOFR/Treasury Option Roundup: Nov Tsy Ops Expiring
SOFR/Treasury option flow remained mixed Friday, early focus on unwinding/rolling November serial Tsy options ahead today's expiration (Nov SOFR options expire in 2 weeks). Underlying futures off lows, trading mildly higher in the short end to intermediates. As such, projected rate hikes into early 2024 inch lower: November at 0% to 5.325%, December cumulative of 4.3bp at 5.372%, January 2024 cumulative 6.9bp at 5.398%, March 2024 at 2.8bp at 5.356%. Fed terminal at 5.40% in Feb'24.
- SOFR Options:
- Block, 9,000 SFRZ3 95.87/96.25/96.50 broken call flys, 0.0 (all legs appear to be crossed at 0.75) ref 94.585
- Block, 5,000 SFRZ3 94.12/94.37 put spds, 0.5 ref 94.585
- +15,000 SFRM 94.75/94.87 call spds from 0.25-0.5 over the SFRM4 94.37/94.50 put spds
- Block, 8,000 SFRH4 93.75/94.25 2x1 put spds, 2.0 ref 94.665
- 2,000 SFRZ3 94.43/94.56 put spds, 3.5 ref 94.58
- +5,000 0QX3/0QZ3 95.75 call spds, 9.0 net (Dec over) vs. 95.395/0.12
- +2,000 2QZ3 96.00/96.37 call spds, 9.5 vs. 95.84/0.24%
- +2,000 SFRH4 96.00 calls, 9.0 vs. 94.695/0.14%
- Block 6,000 SFRF4 94.31 puts, 2.75 ref 94.67
- 2,000 SFRH4 94.18/94.56/94.75 broken put flys ref 94.66 to -.665
- 2,000 0QZ3 94.75/94.93/95.12 put trees ref 95.39
- Treasury Options: Reminder, Nov serial options expire today
- +22,000 TYZ3 107.5 calls, 33 ref 106-10.5
- over 39,500 TYX3 107.5 puts 111-112 ref 106-10 to -09.5
- +5,000 USZ3 102/106 put spds 40 ref 109-13
- 2,000 TYZ3 104/104.5/105.5 broken put flys ref 106-09
- -3,500 TYZ3 106.5 puts, 100 ref 106-12.5
- over 12,800 Wednesday weekly 10Y 107 calls, 11-13 ref 106-04 to -08
- 1,650 FVZ3 105.75/107.25 call spds
- over 5,200 TYZ3 106 puts, 58 last
- over 5,700 TYX 106.5 calls, 4 last
- over 6,200 TYX3 106 puts, 4 last
- over 5,000 TYX3 106.25 puts, 9 last
