AUSSIE BONDS: Forthcoming ACGB Transactions

The AUD & NZD are both drifting higher in our session as risk reacts positively to the ceasefire being extended indefinitely. The NZD continues to lead with tailwinds from the higher CPI print yesterday assisting. It remains to be seen whether they will be able to extend that much above recent highs as momentum for risk-on and against the USD stalls while the market looks for concrete news to trade off out of the Middle-East. 

• {AUDUSD Curncy} - 0.7160, +0.13%
• {NZDUSD Curncy} - 0.5905, +0.22%
• {AUDNZD Curncy} -  1.2125, -0.10%

The BBDXY range overnight was 1192.34-1197.40, Asia is currently trading around 1194. The USD tried to pop higher but the extension of the deadline for an indefinite period has given the shorts some hope a deal can still be accomplished. The price action in the USD would potentially concern those bears who added to their risk on the break lower, they will be hoping for new talks to come around soon before fighting is resumed. The market has been trading like a peace deal was already done, so any resumption of hostilities would see that have to come out of the price, for now it feels like we are in limbo. On the day, I suspect we continue to trade 1185-1205 while we await a clear catalyst to trade on.                        

• Unusual_whales on X -"The Trump administration is reportedly considering a bailout for the United Arab Emirates over economic losses sustained as a result of the U.S. war with Iran," per the New Republic.”
• Financelot on X: "A Dollar shortage + oil shortage isn't supposed to be possible. The demand for oil is inversely correlated to the value of the Dollar. Under normal supply situations, the higher the Dollar the less oil nations can afford, which reduces demand.”
• “What's different this time is there's an engineered supply shock to global oil, but not in the U.S. As nations are starved of oil, their economies slow. Their ability to sell goods to the U.S. declines, which means they receive less Dollars that they need to service their debt.”
• Zerohedge: “The Foundations Of Dollar Dominance Are Weaker than Anticipated..."  https://www.zerohedge.com/geopolitical/foundations-dollar-dominance-are-weaker-anticipated 
• The BBDXY Average True Range for the last 10 Trading days: 5.40 Points

Fig 1: BBDXY Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The AUD/NZD overnight range was 1.2111-1.2147, the Cross is trading in Asia around 1.2120, -0.12%. The Cross stalled again toward the 1.2200 area and turned lower pretty quickly on yesterday's hot NZ CPI print. The price action is starting to turn sluggish as momentum begins to slow toward the important Weekly 1.2200-1.2300 resistance. I expect it to do a lot of work around here initially after close to a 15% bounce from the lows seen almost a year ago. The Bulls though will remain confident while the pair holds above 1.19-1.20 support, but the price action does suggest it might be time for some prudence and to book some of the profit on those longs.

• The AUD/NZD Average True Range(ATR) for the last 10 Trading days: 63 Points

Fig 1: AUD/NZD spot Monthly Chart

Source: MNI - Market News/Bloomberg Finance L.P