MNI EXCLUSIVE: China Analysts Share Steel Futures Outlook

The AUD/JPY range overnight was 109.54-111.65, Asia is currently trading around 110.50, -0.40%. The pair could not ignore the over 2% move lower in US Equities and collapsed lower after touching above 112, but the subsequent bounce in risk thanks to Trump’s declaration on the Strait of Hormuz has seen it recover from its lows. Technically the trend remains strongly up, but we will probably need to do some work in a 109.50-111.50 range while the market works out how viable Trump’s plan really is. On the day, I suspect we see sellers return back toward 111.50 looking for a retest of the lows, unless Iran comes to an agreement to open the Straits through pressure from China. The reaction to AU GDP has seen it initially come back under pressure.

• The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 134 Points

Fig 1: AUD/JPY spot Daily Chart

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

Q4 GDP was slightly better than forecast in terms of headline results. Q/Q was as expected at 0.8%q/q, while Q3 was revised up a touch to 0.5% (from 0.4% initial estimate). The y/y pace was 2.6%, above the market consensus of 2.3% (prior 2.1%). Note as well 2.3% y/y was the RBA projection. Still, Household spending was 0.3%q/q, versus 0.5% in Q3 (1.0% was the Q2 outcome last year). This slightly softer consumption trend, coupled with a higher savings rate may be dampening the market impact, with AUD lower and AU rates weaker. More details to follow. 

The AUD went into the CPI print trading around 0.7035 and the SPI was trading around 8873.0.”AUSTRALIA 4Q GDP RISES 0.8% Q/Q; EST. 0.8% “ - BBG. The AUD has moved a few spreads lower in reaction to this.

• {AUDUSD Curncy} - 0.7020, -0.15%
• {AUDNZD Curncy} - 1.1930, +0.15%
• {EURAUD Curncy} - 1.6525, +0.15%
• {AUDJPY Curncy} - 110.55, -0.40%
• {XPA Index} - 8905, -1.42%
• OIS 2-5 softer, YM +5 bps, XM +3.5 bps