ASIA: Coming Up In The Asia-Pac Session On Friday

AUDUSD made up most of its post-US-tariff-news losses to finish Tuesday down 0.1% at 0.6270 but it still underperformed most of the G10 with only CAD doing worse. It fell to 0.6209 following the announcement as risk-sensitive assets suffered but then recovered during the US session as equities rallied. The USD index finished 0.1% higher.

• AUDUSD’s bearish trend persists with the bear trigger at 0.6131. Initial resistance is at 0.6302, January 6 high.
• The yen outperformed on Tuesday leaving AUDJPY down 0.1% at 97.55 but off the intraday low of 96.77. AUDNZD fell 0.1% to 1.1056. AUDEUR is 0.1% lower at 0.6016 and AUDGBP -0.2% to 0.5082.
• Equities were generally stronger with the S&P up 0.9% and FTSE +0.3% but Euro stoxx flat. Oil prices fell with Brent down 0.8% to $79.52/bbl. Copper was also lower down 0.8% and iron ore is just below $104/t.
• Westpac’s leading index for December prints today. Q4 NZ CPI is released and given high correlations with Australia may have some information for the Australian data due January 29.

• RES 4: 1.4669 2.0% 10-dma envelope
• RES 3: 1.4564 3.500 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 2: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 1: 1.4516 Intraday high  
• PRICE: 1.4363 @ 16:23 GMT Jan 21 
• SUP 1: 1.4261 Low Jan 20
• SUP 2: 1.4230 50-day EMA
• SUP 3: 1.4120 Low Dec 11 
• SUP 4: 1.4011 Low Dec 5

USDCAD price action is volatile this week. A sharp sell-off Monday resulted in a print below support at 1.4280, the 20-day EMA. Price has also traded through the 20-day EMA, at 1.4359. The pullback was short-lived and Tuesday’s reversal higher has delivered a fresh trend high of 1.4516. This highlights the fact that the uptrend remains intact and a continuation higher would open 1.4539, a Fibonacci projection. 1.4230, the 50-day EMA, marks key support.     

The Treasury curve bull flattened Tuesday in the return to cash trade after Monday's holiday, with Trump administration policy remaining the focus after the presidential inauguration.

• TY futures had rallied Monday (amid the cash close), with gains peaking in overnight trade Tuesday, as markets caught up to varying Trump tariff headlines (President Trump clarified Monday his administration may impost 25% tariffs on Mexico and Canada at the beginning of Feb).
• Data was limited: the January Philly Fed non-manufacturing survey was soft, and coming out alongside a below-expected Canadian CPI figure, it helped a nascent morning bid for Treasuries, but ultimately pulled back thereafter with futures closing fairly flat to Monday's early close.
• With 2025 Fed rate cut expectations fairly static (and the FOMC is in its pre-January meeting blackout period), the Treasury short end remained anchored.
• A lack of movement in the 2Y segment means the Treasury curve is as flat as it's been this year across key segments: 2s10s are -5.2bp at 28.6bp (entered 2025 at 32.5bp, January high of 42.9bp); 2s5s -3.2bp at 11.2bp (opened 2025 at 13.5bp).
• Wednesday's data calendar remains light, with MBA mortgage data and the December Leading Index - more focus will be on $13B 20Y Bond reopening auction, as well as a Fox interview with Pres Trump airing after Wednesday's cash close.
• Latest cash levels: The 2-Yr yield is down 0.9bps at 4.2741%, 5-Yr is down 4.1bps at 4.3904%, 10-Yr is down 6.3bps at 4.5642%, and 30-Yr is down 6.4bps at 4.7927%. The Mar 25 T-Note future is up 7.5/32 at 108-25, having traded in a range of 108-085. to 109-04.