AUDUSD TECHS: Fresh Cycle Low Reinforces A Bear Theme

• The Fed delivered a well telegraphed 25bp rate increase, however, the unambiguously hawkish dot plot has caught markets off guard, resulting in a notable surge higher for the US dollar.
• Greenback strength extended steadily from the statement release and through the press conference as the market continued to assess the higher-for-longer rate outlook within the SEP and Chair Warsh saying that this summer's inflation readings "do not tell me that underlying trends have meaningfully improved”.
• The DXY is now 1.15% higher compared to last Friday’s close as we approach the APAC crossover. The 50-day EMA, currently intersecting at 99.64 has been working as a very significant pivot over the past few months, and a daily/weekly close above this level and the Aug high of 100.08 should spur further topside interest from momentum accounts.
• The negative spillover to risk sentiment/equities sees the likes of NZD (-0.87%) and SEK (0.91%) be the relative underperformers at the margin, although the greenback rally has been broad-based.
• Notably, USDCHF has risen to a fresh cycle high, testing above 0.8250 in late trade. Spot levels represent the highest print for the pair since June 2025. Bull channel resistance is located at 0.8300, before the 50% retracement of the 2025-2026 price swing at 0.8403.
• GBPUSD also extends intra-day declines to 0.75%. The pair has breached both support at the 50-day EMA, currently at 1.3492, and 1.3475, a trendline drawn from the Jun 24 low. A confirmed break of both support points would highlight a stronger bear threat and open a retracement level at 1.3345 next.
• The focus now turns to New Zealand Q2 GDP data Thursday, before the BOE decision. US data includes Philly Fed manufacturing index, jobless claims and pending home sales. The BOJ decision is Friday.

See link below for a rough transcript of Fed Chair Kevin Warsh's September press conference (PDF) - unedited, check against delivery:

Fed2026septembertranscript.pdf

• With a particularly short press conference by Fed Chair Warsh concluded, US rates losses have extended the SEP-driven sell-off, with much of the presser price action coming early on but a further leg coming towards the end.
• OIS prices 14bp of hikes for the October FOMC meeting vs 10bp pre-Warsh and circa 8bp pre-decision (table below shows Fed Funds futures which are still somewhat lagged).
• SFRM7 leads losses seen since the initial FOMC decision, currently 17.5 ticks lower (7.5 on the SEP, 10 since Warsh) for 10.5 ticks lower on the day – see charts.
• The terminal yield has punched through yesterday’s latest cycle high of 4.685% to 4.735%.
• The moves drive sizeable flattening in Treasury curves, with 2s10s 7bp flatter since the FOMC decision and 5s30s 8bp flatter.
• Early moves came as Warsh repeated his Jackson Hole line that he would be hard pressed to describe broad financial conditions as restrictive - and said that view was widely shared on the Committee, which is why they took action by removing a "dose" of accommodation.
• "The plain fact is that inflation is too high, and has been for too long." He says this summer's inflation readings "do not tell me that underlying trends have meaningfully improved", with core PCE running at "about 3.2%" and "too many categories" still rising above 3% on both 6- and 12-month rates.