US DATA: Dallas Fed Survey Affirms Slowly Firming National Services Activity
The Dallas Fed's monthly Texas Service Sector survey showed the diffusion index for general business activity remained fairly steady at 9.6 in December, vs 9.8 in November.
- That figure was bolstered by stronger revenue and company outlook readings and lower outlook uncertainty, however employment/hours worked and capex weakened even as input and selling prices increased.
- Looking ahead, per the report, "Other future service sector activity indexes such as employment and capital expenditures remained in positive territory, reflecting expectations for sustained growth in the next six months.". Indeed the 6-month ahead reading hovered around November's 36-month high, possibly a byproduct of post-election business optimism but also in line with the broader trend of improvement since mid-2022. For what it's worth, the anecdotal commentary in the Services survey pointed to concerns over shifts in tariff and immigration policy negatively impacting their business/sector/the broader economy.
- The regional Fed services surveys have each shown softer activity vs November, with the Philly Fed's declining 0.1 point to -6.0, and the NY Fed's dropping 4.7 points to -5.2. The month-to-month Fed regional readings don't translate cleanly into the broader national ISM non-manufacturing reading, though the pullback in November to 52.1 (56.0 prior) looks better-supported by the regional evidence than does the S&P Global Services PMI's December flash reading showing an improvement to a multi-year high 58.5 (56.1).
- Overall, though, services appear to me moving in a firming rather than a deteriorating direction. The regional surveys do broadly affirm a continued divergence between manufacturing steady at a slow pace, and services showing some improvement.
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AUSSIE 3-YEAR TECHS: (Z4) Bounce Mode
- RES 3: 96.380 - High Mar 21 2023
- RES 2: 97.190 - High May 5 2023
- RES 1: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- PRICE: 96.090 @ 15:41 GMT Nov 29
- SUP 1: 95.760 - Low Nov 13
- SUP 2: 95.750 - Low 27 Nov ‘23
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Having hit a fresh pullback low at 95.760 across the global rates sell-off in recent weeks, the market found bottom and has staged a shallow bounce above the 96.00 handle. Nonetheless, recent weakness confirms the downside bias, with support undercutting at 95.750 below ahead of major support of 95.480. For any corrective recovery to take hold, markets need to retake the 96.00 handle on a closing basis.
USDCAD TECHS: Pullback Appears Corrective
- RES 4: 1.4287 2.0% 10-dma envelope
- RES 3: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4196 1.764 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4078/4178 High Nov 27 / 26 and the bull trigger
- PRICE: 1.4005 @ 16:09 GMT Nov 29
- SUP 1: 1.3965/28 20-day EMA / Low Nov 25 and a key support
- SUP 2: 1.3858 50-day EMA
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
Trend conditions in USDCAD remain bullish and Tuesday’s fresh cycle reinforced this theme. The move higher confirmed a resumption of the primary uptrend and marked an extension of the bullish price sequence of higher highs and higher lows. Sights are on 1.4196 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. For now, the latest pullback appears corrective.
AUDUSD TECHS: Corrective Bounce
- RES 4: 0.6762 High Oct 9
- RES 3: 0.6733 High Oct 13
- RES 2: 0.6604/88 50-day EMA / High Nov 7 and a reversal trigger
- RES 1: 0.6534/50 20-day EMA / High Nov 25
- PRICE: 0.6512 @ 16:03 GMT Nov 29
- SUP 1: 0.6434 Low Nov 26
- SUP 3: 0.6400 Round number support
- SUP 3: 0.6350 Low Aug 5 and a key support
- SUP 4: 0.6339 Low Nov 10 2023
A bearish theme in AUDUSD remains intact. The fresh cycle low on Tuesday marks an extension of the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350, the Aug 5 low and the next key support. The pair has recovered from its recent lows - a correction. Initial firm resistance to watch is 0.6534, the 20-day EMA.
