OPTIONS: Expiries for Mar04 NY cut 1000ET (Source DTCC)

UBH6 5K blocked at 109.86, recent downtick suggests a seller, despite being conducted above the prevailing offer at time quoted by BBG. DV01 ~EUR1.06mln.

• The weaker commodity complex, with oil also down ~5%, did weigh on the likes of AUD and NZD to start the week, although both have stabilised across the European morning. Positioning dynamics will also be a consideration for AUD as we approach the RBA decision tomorrow.
• The combination of a resilient labour market and stronger than expected Dec/Q4 inflation has the sell-side consensus expecting a 25bp RBA rate hike tomorrow. If delivered, focus will be on how much follow up action the central bank sees as needed to ensure inflation returns to target.
• For AUDUSD, the recent streak of consecutive winning sessions came to an end on Friday, and spot has subsequently stabilised around 0.6950. The latest pullback highlights the start of a corrective phase. If correct, it suggests potential for an extension towards support around the 20-day EMA, at 0.6835. This would also confirm an unwinding of the recent overbought trend condition.
• Key short-term resistance and the bull trigger have been defined at 0.7094, the Jan 29 high.

• RES 4: 112-31   High Dec 18 and key short-term resistance
• RES 3: 112-22   High Jan 7 
• RES 2: 112-08+ 50-day EMA 
• RES 1: 112-02   Intraday high
• PRICE:‌‌ 111-31+ @ 10:57 GMT Feb 2
• SUP 1: 111-15+/09 Low Jan 28 / 20 and the bear trigger
• SUP 2: 111-00   Round number support
• SUP 3: 110-30+ 1.618 proj of the Oct 17 - Nov 5 - 25 price swing  
• SUP 4: 110-22+ 1.764 proj of the Oct 17 - Nov 5 - 25 price swing

Treasuries are firmer today. However, the trend condition remains bearish and short-term gains still appear corrective. The contract has traded through the 20-day EMA, at 111-31. The next important resistance to watch is 112-08+, the 50-day EMA. A clear break of the 50-day average is required to signal scope for a stronger recovery. For bears, a resumption of weakness would refocus attention on the bear trigger at 111-09, the Jan 20 low.