ASIA: Coming Up In Asia Pac Markets On Friday

The AUD/USD had a range overnight of 0.6902-0.6987, Asia is trading around {AUDUSD Curncy}. The AUD held easily above 0.6900 and its upward momentum is accelerating. The USD looks to be in some real trouble and the Antipodeans will be a huge beneficiary of that. Trump commenting this morning he isn’t concerned by its decline will only add fuel to the fire that they prefer a weaker USD. The AUD though has very quickly moved back towards 0.7000-0.7100 and I would expect it to do some work up there initially. The price continues to look a little stretched in the short-term but when the market moves like this it is tough to stand in the way.  In the Asian session, the first buy-zone is back toward the 0.6940-0.6970 area and then 0.6875-0.6900. The bulls will now be looking at what a sustained break above 0.7100 would look like, and this has the potential for the start of a larger move higher.

• MNI - Australia Q4 Inflation: The outlook for Australia’s December 2025 quarterly Consumer Price Index is one of persistent, higher-than-expected inflationary pressure, with significant risks that it will stay above the Reserve Bank of Australia’s 2–3% target range. The removal of state and federal government electricity subsidies at the end of 2025 is expected to cause a sharp, albeit partly technical, jump in headline inflation, expected to show up in the upcoming release. After dipping in mid-2025, annual inflation accelerated again in October and November 2025, with November recording a 3.4% annual rise, suggesting strong momentum heading into the December quarter.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6900(AUD1.1b). Upcoming Close Strikes : 0.6800(AUD944m Jan 30), 0.6825(AUD861m Jan 29) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 59 Points
• Data/Event: CPI

Fig 1: AUD/USD spot Weekly Chart

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

• RES 4: 1.3929 High Jan 16 and a reversal trigger     
• RES 3: 1.3879 High Jan 20
• RES 2: 1.3841 50-day EMA 
• RES 1: 1.3810 20-day EMA
• PRICE: 1.3600 @ 18:05 GMT Jan 27
• SUP 1: 1.3591 Low Jan 27
• SUP 2: 1.3576 Low Jul 23 ‘25
• SUP 3: 1.3540 Low Jun 16 and a key medium-term support
• SUP 4: 1.3473 Low Oct 2 ‘24   

A sharp sell-off in USDCAD last week cancels a recent bull theme and a bearish session today reinforces the current downtrend. The pair has pierced a key support at  1.3643, the Dec 26 low. A clear break of this level would mark an important short-term bearish development and open 1.3567, the Jul 23 ‘25 low. On the upside, key short-term resistance to monitor is 1.3841, the 50-day EMA.    

• Treasuries look to finish mixed, curves steeper with the short end outperforming Tuesday - partially anchored ahead of an expected steady FOMC rate annc tomorrow, focus on appropriate pace of easing over the coming year ongoing. Additional concern over potential US Gov shutdown late Friday as efforts falter over DHS funding.
• The Conference Board consumer survey was far weaker than expected in January, with its main index falling to 84.5 for an almost 10pt drop from December to its lowest level since May 2014.
• The Bank of Canada is overwhelmingly expected by both markets and analysts to maintain its overnight rate at 2.25% at the January meeting tomorrow, would be a 2nd consecutive pause as part of what is anticipated to be a flat rate path through 2026.
• US Dollar took another leg lower on late comments from Pres Trump at Iowa presser "DOESN'T THINK DOLLAR DECLINED TOO MUCH" -bbg, BBDXY fell to appr 4Y low of 1173.53 (-14.43).
• Currently, TYH6 -2 at 111-24.5 (111-21 low / 111-29 high), a bear theme remains intact and short-term gains are considered corrective. Initial firm resistance is at the 20-day EMA, currently at 112-02. The 50-day EMA is at 112-11.
• UBS forecast Australian Q4 '25 headline CPI at 0.5% q/q & 3.5% y/y, ~16bps above published RBA estimates. The trimmed mean CPI we estimate rose by 0.8% q/q & 3.2% y/y, ~7bps above the RBA's expectations.