BUND TECHS: (H6) Bearish Theme Remains Intact

• RES 4: 130.63 1.500 proj of the Sep 3 - 10 - 25 price swing 
• RES 3: 130.59 High Oct 17 and the bull trigger
• RES 2: 130.07 High Oct 24 
• RES 1: 129.42129.73 20-day EMA / High Oct 28     
• PRICE: 129.20 @ 05:47 GMT Nov 4 
• SUP 1: 129.06 Low Nov 3      
• SUP 2: 128.92 61.8% retracement of the Sep 25 - Oct 17 bull leg
• SUP 3: 128.52 76.4% retracement of the Sep 25 - Oct 17 bull leg
• SUP 4: 128.25 Low Oct 7  

Bund futures traded to a fresh short-term cycle low yesterday. A bear cycle remains intact for now. The move down that started on Oct 17 still appears corrective and has allowed an overbought trend condition to unwind. However, price has pierced a key support at 129.13, the 50-day EMA. A clear break of this EMA signals scope for a deeper retracement and opens 128.92, a Fibonacci retracement. First important resistance is 129.73, Oct 28 high.

AUD/USD has edged back higher as RBA's Bullock delivered her post RBA meeting press conference. We were last 0.6530, after getting to 0.6518 post the RBA. The market may have been looking for something a little more hawkish from the statement/forecasts. Bullock's tone was cautious though and she openly questioned how much more easing would be delivered this cycle (noting they are close to neutral) and reiterated that as the RBA didn't raise rates as much (compared to other global central banks) and therefore might not need to cut as much. 

• The AUD/NZD cross has returned to fresh session highs in latest dealings, last 1.1485/90, against earlier lows of 1.1446. The crosses may remain the preferred expression for AUD longs as opposed to the USD, with the USD index levels still holding up (JPY is the only major to firm against the USD so far today).
• For the AUD/NZD cross, upside focus will be on the 1.1500 area. Beyond that region we have the 1.1660 area, last seen back in 2013.
• Note in NZ tomorrow, Q3 jobs and wages data are released Wednesday and with spare capacity an important driver of monetary easing, will be monitored closely as there has been excess supply in the labour market. 

The Board only considered keeping rates at 3.6% at its November meeting as well as discussing its strategy going forward. Governor Bullock observed that the Board thinks it is “pretty close to neutral”, which makes it difficult to assess the level of policy restrictiveness, and thus it doesn’t have a bias, which is consistent with its discussion around holding. She said that data will continue to drive its outlook and the Board will decide policy on a “meeting-by-meeting basis” with all directions in rates possible.

• The jump in underlying inflation in Q3 was partly due to temporary factors, such as council rates, travel & fuel, but also because of more persistent items, such as dwelling costs & market services, which may be signalling that demand is exceeding supply. While the trimmed mean is expected to remain above 3% over the next year, the RBA is forecasting the quarterly increases to moderate.
• Both inflation and unemployment rose more than the bank expected, and as there is information in both, the Board remains cautious and a bit more concerned about getting inflation back in the band. 
• Bullock noted that labour market forward indicators suggest that conditions are more stable than the September unemployment rate suggested and for now are likely to stay steady. ULC growth is also rising quickly. The Board is alert to risks in both directions.
• She reiterated that rates didn’t rise as much in Australia as in other countries, therefore it is likely that it won’t need to cut as much either. For now, the Board believes it is where it needs to be and is in a position to respond to both upside and downside risks.