GOLD: Gold Declines Post US Data.
Dec-12 22:41
- Mixed data overnight was enough for gold traders to square positions as year end approaches.
- Data overnight saw producer price inflation pick up by more than expected in November, at +0.4% MoM vs 0.3% prior, though core prices moderated as ex-food/energy registered 0.2% (from 0.3% prior} and initial jobless claims were higher than expected at 242k (sa, cons 220k)
- Gold opened the day at US$2,680.84 only to trade down post the data release to an intra-day low of $2,675.29, to finish at $2,681.21
- The futures market is exhibiting some unusual patterns as traders seek to hedge positions out to February, fearing gold may be caught up in the crossfire of Trump’s tariffs.
- February future prices traded up to $60 an ounce above spot prices overnight, as estimates suggest tariffs if implemented on gold, could see prices fall by $300 an ounce.
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AUSSIE BONDS: Sharply Cheaper Ahead Of Q3 WPI & US CPI Data
Nov-12 22:37
ACGBs (YM -6.0 & XM -7.5) are sharply weaker after the US 10-year cheapened 12bps to 4.43% and the 2-year yield rose 9bps to 4.34%. Concerns over sticky-high inflation ahead of today's US CPI report and concerns over potentially inflationary aspects of Trump's fiscal policies exacerbated selling.
- The post-election surge in US equities lost some momentum, as major indices consolidate near record highs.
- “S&P positioning is currently at the highest level witnessed in the past 3 years, with positioning levels also extended across Nasdaq and Russell 2000. Profits are elevated for both S&P and Russell and this could lead to near-term profit-taking which may limit further upside,” Citigroup strategist Chris Montagu said. (per AFR)
- Cash ACGBs are 5-7bps cheaper with the AU-US 10-year yield differential at +21bps.
- Swap rates are 5-7bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing -2 to -7.
- RBA-dated OIS pricing is 1-6bps firmer across the 2025 meeting. A 25bps rate cut is not fully priced until July.
- Today's local calendar will see the Q3 Wage Price Index, ahead of the Employment Report for October tomorrow.
- The AOFM plans to sell A$800mn of the 2.50% 21 May 2030 bond today and A$700mn of the 4.75% 21 April 2027 bond on Friday.
CNH: USD/CNH Tests Above 7.2500, But CNH Outperforms Parts Of G10
Nov-12 22:18
USD/CNH tracks near 7.2425 in early Wednesday Asia Pac dealings. Intra-session highs from Tuesday trade came in at 7.2555, which was close to early August highs (7.2583). CNH lost around 0.20% for Tuesday's session, marginally outperforming the BBDXY gains of 0.46% (DXY rallied 0.36%). Since last Thursday the CNH has lost a cumulative 1.3%. Spot USD/CNY finished up Tuesday trade near 7.2350. The CNY CFETS basket tracker nudged a little higher to 99.55, but remains within recent ranges.
- Whilst CNH outperformed some parts of the G10 bloc, particularly GBP and JPY, upside focus persists for USD/CNH. Late July highs in the pair came in at 7.2761. Beyond that rests a test of the 7.3000 level. We had a number of highs close to the 7.2100 level post the US election, which act as a support point on any downside pullbacks.
- Like elsewhere though, we are approaching overbought signals from a technical standpoint (RSI (14) at 66.18) for USD/CNH/
- The broad US yield surge kept dollar sentiment supported through Tuesday trade. Coupled with concerns around foreign policy hawks coming into the Trump administration next year were the main yuan headwinds yesterday.
- Onshore equities finished lower, the CSI 300 down 1.1%, with earlier BBG headlines around lower home buyer taxes not lifting sentiment sustainably. In US trade the Golden Dragon index lost 4.14% on Tuesday.
- The local data calendar is likely empty today (we await FDI figures), with the main focus on home prices and Oct activity figures this Friday.
NZD: AUDNZD: AUD/NZD Little Changed, AU-NZ 2yr Swap Continues To Fall
Nov-12 22:09
- The AUD/USD closed unchanged at 1.1024 on Tuesday, in what was a largely uneventful session for the cross, both currencies weakened vs the USD as tsys yields rose. There is nothing major on the local data calendars either today, with focus largely on global yields, while any further announcements out of China will be closely watched.
- The cross have spent the past month and a half trading with a narrow range of just 1.1000 to 1.1100.
- The AU-NZ 2yr swap fell 4bps on Monday to 34.5bps, and now trades 26.5bps off recent highs made last week.
- Looking at technical levels the cross tested recent highs (1.1080) last week before a decent reversal, a break above this level is needed to open a move to test the yearly highs of 1.1144 (July 29). To the downside, spot is currently trading just on initial support at 1.1027 (20-day EMA), with a break here likely to open a move to 1.1100 (round number support)
- Upcoming expiries 1.1375 ($361m), 1.1410 ($245m) for Nov 14th NY cut
- Australia has Wage Price Index at 1130 AEST
