AUSSIE 3-YEAR TECHS: (H6) Near-Term Weakness Extends
- RES 3: 96.700 - High Sep 12
- RES 2: 96.260 - Congestion High Nov 19 -24 ‘25
- RES 1: 96.925 - High Jan 9 and a key short-term resistance
- PRICE: 95.430 @ 16:47 GMT Mar 12
- SUP 1: 95.370 - Low Mar 09
- SUP 2: 95.305 - 3.0% Lower Bollinger Band
- SUP 3: 94.619 - 1.0% 10-dma envelope
The bearish primary trend structure in Aussie 3-yr futures strengthened last week on the sell-off tripped by the Iran war. The bear mode set-up in MA studies is highlighting a dominant downtrend. In addition, any weakness through year-to-date lows at 95.560 has prompted further downside, opening vol-band support into 94.619. Resistance to watch remains 95.925, the Jan 9 high. A clear break of it would signal a short-term reversal.
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AUSSIE 3-YEAR TECHS: (H6) S/T Net Higher After Recent CPI Vol
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 95.690 @ 15:26 GMT Feb 10
- SUP 1: 95.560 - Low Jan 27
- SUP 2: 95.480 - Low 1st Nov ‘23
- SUP 3: 94.932 - 1.0% 10-dma envelope
Prices were pressured to new lows on the back of the December and Q4 CPI print, quickly printing 95.560 before a swift recovery. This puts prices net higher and may signal a near-term bottom for the curve, even as markets continue to price in some rate hike optionality in the coming months. For now, prices remain well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support.
GOLD: ST Bias for Lower, US Rate Expectations Next Focus
- Despite a move lower in US bond yields on rate cut expectations overnight, gold finished lower. Gold is sensitive to US rates as a direct relationship to the cost of financing and will typically rally when yields move lower on rate cut hopes.
- At present gold markets are continuing to recover from the volatility to start February, with ETFs experiencing outflows and the after effects of the collapse of several gold platforms still rippling through markets.
- The Moving Average Convergence Divergence momentum indicator still flags bearish trends as the MACD (white) line remains below the Signal (red) line.
- Gold traded in a $4,987 - $5,078 range overnight only to finish down for the day at US$5,025.45 for losses of -0.64%.
- Bullish year end forecasts from major investment banks haven't been revised down yet given the outlook for demand for gold from Central Banks. Looking ahead, the short term outlook for gold (and US rates) will be impacted by the upcoming non farm payrolls out Wednesday and Inflation out Friday in the US.
AUSSIE BONDS: Richer With US Tsys Ahead Of US NFP
ACGBs (YM +3.0 & XM 4.5) are stronger after US tsys finished with a bull-flattener.
- US tsys gained after Peter Navarro, counselor to Pres Trump, expressed the "need to revise expectations on monthly job numbers" - BBG.
- MNI - US January Labour Market Report. Monthly payroll growth is currently expected at 70k in January for a slight acceleration from the 50k in December and 56k in November. The market likely currently views that to be on the high side considering a swathe of soft labor indicators recently. We'll finally see these annual benchmark revisions to the level of employment back in March 2025 with this release, with the preliminary estimate of -911k but -700-800k more likely in our view.
- Cash ACGBs are 3-5bps richer with the AU-US 10-year yield differential at +64bps.
- The bills strip has bull-flattened, with pricing flat to +3 across contracts.
- RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 13% for March to 90% by June and 142% by December 2026.
- Today, the local calendar will see Home Loan data alongside RBA's Hauser-Fireside Chat.
- The AOFM also plans to sell A$700mn of the 3.75% 21 April 2037 bond on Wednesday and A$1000mn of the 2.50% 21 May 2030 bond on Friday.
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