GOLD: Gold Holds Modest Gains But Down for the Week

ACGBs (YM -3.0 & XM -3.0) are cheaper with narrow ranges.

• Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session after yesterday's post-CPI sell-off.
• Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at -7bps. At -7bps the differential is positioned near the middle of the +/- 30bps range that has held since November 2022.
• The bills strip cheaper with pricing -3 to -4 beyond the first contract (-1).
• RBA-dated OIS pricing is firmer across meetings today and remains 17–21bps above levels seen prior to the 8 July RBA decision. A 25bp rate cut in August is given an 88% probability, with a cumulative 54bps of easing priced by year-end.
• Tomorrow, the local calendar will see June Employment and Consumer Inflation Expectation data.
• (Bloomberg Economics) -- Australia’s labour market report for June is likely to show a lift in jobs and a slight increase in the unemployment rate. We expect a 20k increase in jobs, after a weaker-than-expected 2.5k decline in May.
• The AOFM plans to sell A$1100mn of the 1.00% 21 November 2031 bond on Friday.

• RES 4: 131.95 High Jun 13 and the bull trigger
• RES 3: 131.33 High Jun 20  
• RES 2: 130.76 High Jul 4
• RES 1: 130.01/130.28 20- and 50-day EMA values
• PRICE: 129.48 @ 05:44 BST Jul 16
• SUP 1: 129.08 Low Jul 14 
• SUP 2: 128.97 Low May 14 and a reversal trigger
• SUP 3: 128.90 Low Apr 10 
• SUP 4: 128.40 Low Apr 9

Bund futures have recovered from their latest lows, however, a bear cycle remains intact. Recent weakness resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.28, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.

The BBDXY has had a range of 1206.31 - 1208.31 in the Asia-Pac session, it is currently trading around 1207, -0.05%. The BBDXY surged higher with US yields in response to the CPI print. “Today’s inflation print showed that tariffs are having an impact on core goods and that impact is likely to get larger from here, limiting how much the Fed can cut and boosting the dollar,” said a currency strategist at Barclays” - BBG

• EUR/USD -  Asian range 1.1601 - 1.1616, Asia is currently trading 1.1615. The pair is testing its first support around the 1.1600 area. The price still looks a little stretched in the short term and is vulnerable to any correction in the USD, first support around 1.1600 then more importantly the 1.1450 area.
• GBP/USD - Asian range 1.3382 - 1.3401, Asia is currently dealing around 1.3385. Price has rejected the move higher and Bailey’s hint that bigger rate cuts are on their way if the job market deteriorates further has added further headwinds. The pair has moved very quickly to test important support around 1.3350/1.3400. I would think there could be demand first up around here but a sustained break below and a deeper pullback towards 1.3000/1.3200 could be on the cards.
• USD/CNH - Asian range 7.1733 - 7.1757, the USD/CNY fix printed 7.1526, Asia is currently dealing around 7.1840. Sellers should be around on bounces while price holds below the 7.2000 area and the PBOC manages the fix lower. Above 7.2000 and we could see a test of the USD Shorts.
• Cross asset : SPX -0.15%, Gold $3335, US 10-Year 4.475%, BBDXY 1207, Crude oil $66.76
• Data/Events : Italy CPI & Trade Balance

Fig 1: GBP/USD Spot hourly Chart

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