FOREX: Dovish RBA Tilt Threatens Extension Lower for AUD
- Monday’s China-linked rally for the Australian dollar was met by a clear pivot for the RBA overnight, prompting a swift turnaround back towards cycle lows for AUDUSD. Despite the enthusiasm to start the week, it was noted that trend conditions remain bearish and resistance at the 20-day EMA continues to cap the pair’s short-term relief rallies well.
- Bolstering the bearish sentiment, Friday was the first daily close below the 0.6400 mark since November 2023. Multiple lows at 0.6380 this week represent the immediate level of interest, before key support at 0.6350. Below here, attention would be on 0.6259, the 1.00 projection of the Sep 30 - Nov 6 - 7 price swing.
- Potentially offering more bang for the buck at current levels, AUDJPY still has room to reverse yesterday’s impressive 2% bounce, with yesterday’s lows still well over 100 pips away. The cross has been edging lower following the break of trendline support in late November, drawn from the August lows. Spot has also been respecting Fibonacci retracements well, leaving 94.69 as the most obvious downside target (shown below).
- AUDNZD is also trading at unchanged levels, however, the cross is consolidating back below 1.1000. As a reminder, Goldman Sachs have recommended selling AUDNZD in anticipation of an RBA pivot, with a target of 1.08 and a stop of 1.1050.
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Historical bullets
JGB TECHS: (Z4) Bounce Reverses
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 143.70 @ 16:14 GMT Nov 08
- SUP 1: 143.39 - Low Nov 07
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further Thursday, extending the recent pullback. The return lower at the start of this week has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.32, and marks first resistance. A continuation higher would open 146.53, the Aug 6 high (cont) and a bull trigger.
US TSY FUTURES: BLOCK: Late 2Y/10Y Ultra-Bond Flattener
- Flattener crossed late Friday at 1645:30ET, DV01 $322,000
- -8,900 TUZ4 102-23.88, sell through 102-24.38 post time bid vs.
- +3,700 UXYZ4 113-16, post time offer
USDCAD TECHS: Trend Needle Points North
- RES 4: 1.4179 2.0% 10-dma envelope
- RES 3: 1.4000 Round number resistance
- RES 2: 1.3977 High Oct 13 and a key M/T resistance
- RES 1: 1.3959 High Nov 1 / 6
- PRICE: 1.3910 @ 16:29 GMT Nov 8
- SUP 1: 1.3836/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 2: 1.3744 50-day EMA
- SUP 3: 1.3611 Low Oct 8
- SUP 4: 1.3567 Low Oct 7
USDCAD reversed course Wednesday and recovered from Tuesday's low. The trend outlook is unchanged, it remains bullish. Attention is the key resistance at 1.3946, the Aug 5 high. This hurdle has been pierced, a clear break would strengthen the uptrend and open 1.3977, the Oct 13 high and a key medium-term resistance point. Initial firm support to watch lies at 1.3836, the 20-day EMA.
