AUSSIE 10-YEAR TECHS: (H6) Found Bottom?

Commodity currencies underperformed the G10 on Monday with metal prices lower and equities mixed. The risk-averse yen outperformed supported by the BoJ December meeting opinions (SOO) signaling plans to increase rates further as members feel that the negative real policy rate is adding to downward pressure on the currency. The USD index finished slightly higher but had been in a narrow range of 1199.8/1202.5 through the day. 

• USDJPY trended lower through the European/US session reaching a low of 155.92, below where it was following the SOO. It finished down 0.3% to 156.05 and is currently around this level. There are no data this week.
• Aussie was an underperformer along with NOK and kiwi. AUDUSD fell 0.3% to 0.6694 after trading above 0.6700 through the APAC session reaching a high of 0.6727. It has started Tuesday around 0.6691.
• NZDUSD was down 0.55% to 0.5804 yesterday breaking below 0.5800 briefly to make a low of 0.5790. Its underperformance drove AUDNZD 0.2% higher to 1.1533 off the intraday peak of 1.1549, a new December high. It is currently lower at 1.1526. The pair has trended upwards since April as global trade risks dissipated and monetary policy expectations between the two countries diverged.
• The euro was slightly lower and the pound marginally higher against the US dollar leaving EURGBP down 0.1% to 0.8713 but has started today up to 0.8716.
• The US 2-year yield was lower. Equities were mixed with the S&P down 0.4% but Euro stoxx up 0.1% and FTSE flat. Metals corrected with gold falling 4.4% and copper down 4.6%. Oil rose with Brent +1.7% to $61.70/bbl. Iron ore remained around $105.50-106.00/t.

Sell 10,000 of TYH6 traded at 112-24, post-time 08:13:40 AEST (DV01 $671,132). The contract closed at 112-23, +0-04+ from closing levels.

After major gains last week, gold and silver fell sharply on Monday driven by profit taking into year end as the metals flashed overbought with the move amplified by light holiday-related volumes, which could drive further volatility this week. The increase in CME margin requirements from Monday was also a trigger. The moderation of geopolitical tensions from progress on Ukraine peace talks likely also contributed. 

• Gold has lost last week’s gains falling 4.4% to $4332.35/oz off the intraday low of $4307.67. Bullion remains in a bullish structure and Monday’s decline is seen as corrective. It is up 2.2% this month.
• Silver has given up most of Friday’s rally but not all. It is down 9.0% to $72.14 after reaching $70.543, holding above support at $67.239, 22 December low. It made a new record high in the APAC session rising to $84.008. It is still 27.7% higher in December as the physical market remains tight.
• The CME decision to increase the cash held to back precious metals futures positions was a “normal review of market volatility”, according to DJ. Positions were liquidated where the cash wasn’t available to meet the new requirements.
• The US dollar was slightly higher while the 2-year yield was lower. Equities were mixed with the S&P down 0.4% but Euro stoxx up 0.1% and FTSE flat. Copper also corrected falling 4.6% while oil rose with Brent +1.7% to $61.70/bbl.