FOREX: Firm Risk Sentiment Persists, AUDUSD Extends Higher Highs Streak
Dec-05 10:14
- AUDUSD continues its slow but steady ascent, trading further above the late October highs of 0.6618 to reach an intra-day peak of 0.6635. The pair has now posted 10 consecutive sessions of higher highs, as the bullish impulsive wave extends. With a number of resistance points being cleared, targets on the topside are now found at 0.6660 (Sep 18 high) and 0.6723, the Oct 21 2024 high.
- As a reminder, renewed dollar pessimism and associated risk-on sentiment have been primary drivers of the move, as the market prices a more dovish tilting Fed next year and some analysts cite negative seasonal factors around year-end hedging and repatriation flows. However, domestic data developments continue to point to a more cautious RBA ahead.
- This has been highlighted by the high October underlying CPI inflation print at 3.3%, and underlying details of the ‘weak’ Q3 GDP print continuing to show very strong domestic demand. Indeed, Governor Bullock said that while the output gap size is uncertain, it probably has closed, which increases risks to inflation from stronger demand. Bullock indicated the board “will respond accordingly” should inflation pressures build.
- The RBA decision is announced next Tuesday, and rates are highly likely to be left at 3.6% for some time. With the outcome widely expected, the tone of the statement and press conference will be scrutinised.
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EQUITY OPTIONS: BNP Put Spread
Nov-05 10:11
BNP (19th Dec) 52/40ps, bought for 14 in 1k.
US: Yields, USD Edge Higher as WaPo Report on Move to End Shutdown
Nov-05 10:11
Washington Post report that "A handful of moderate Senate Democrats are considering voting to end what has now become the country's longest government shutdown, splitting the caucus as some colleagues to their left urge them to hold out. [...] A bipartisan group of senators is working to craft a deal in which Congress would pass three full-year appropriations bills to fund some agencies, along with a short-term bill that would reopen the rest of the government, according to four people familiar with the talks"
- US 10y yields inch to new daily highs on the back of that Washington Post story - testing 4.09%. In tandem, USDJPY edges higher, briefly printing 153.84. We note that much of that plan had emerged late yesterday - and while the move to end the shutdown is clearly gaining traction, it is still well short of any firm resolution in the very near-term.
- Core global FI markets tick lower, with TY, Bund and gilt futures to fresh session lows, but remain comfortably within week-to-date ranges given uncertainty whether a deal will ultimately be struck.
RIKSBANK: No New Signals From Thedeen In Opening Presser Remarks
Nov-05 10:06
The Riksbank’s press conference (in Swedish) has started. Governor Thedéen re-iterates the main signals from the policy statement and MPU.
- The rate path presented in September is mostly intact.
