AUSSIE 10-YEAR TECHS: (H6) Shallow Bounce

In post-Tokyo trade, JGB futures closed stronger, +11 compared to settlement levels (see chart), despite US tsys closing near session lows on Tuesday ahead of today's FOMC decision.

• The US tsys move was initially driven by US job-openings data, which surprised sharply to the upside: October JOLTS printed at 7,670k (sa; cons. 7,117k), while September was also higher than expected at 7,658k. Both represent a notable jump from the 7,227k level seen in August, just before the government shutdown.
• MNI: Fed Dots To Show 1-2 Rate Cuts Next Year - Ex-Officials. A fragile consensus for a December interest rate cut from the Federal Reserve is likely to produce a negotiated pause for early 2026, with the centre of the FOMC projecting one to two more steps down toward neutral in 2026, former Fed officials told MNI.
• (Bloomberg) "Bank of Japan Governor Kazuo Ueda said the central bank is getting closer to attaining its inflation target, adding to signals that the BOJ may raise its interest rate at a policy meeting next week."  (see link)
• Today, the local calendar will see PPI data.

Source: Bloomberg Finance LP

• 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: 95.805 @ 15:51 GMT Dec 09
• SUP 1: 95.800 - Low Dec 10
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.114 - 1.0% 10-dma envelope

Prices printed fresh pullback lows again Tuesday on the back of the hawkish RBA hold. This presses prices further through January lows to touch 95.800. The slower pricing for additional RBA easing - and partial pricing for a return to rate hikes next year - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.760 as the next major support. 

The overnight range was 7.0600 - 7.0702, Asia is currently trading around 7.0630. The pair continues to trade heavy for the moment ignoring the rebound in the USD. The pair still looks to be under pressure and the PBOC has a job on its hands to turn this around, especially with the surplus now over $1 trillion. US yields are much higher over the week as we head into the FOMC and the USD is bouncing, does the PBOC push back on the stronger CNY today ? On the day resistance is back toward the 7.0750-7.0850 area at first then 7.10-12 above. I suspect sellers will be lining up again on a bounce back towards the 7.0900-7.1200 area if they do see it.

• Brad Setser posted on X regarding comments from Jens Eskelund: “Amazing pair of stats from Jens Eskelund of the European Chamber in China -- who comes from the shipping industry and knows this data cold.”
• “Eskelund says that China’s trade imbalance with the world is even more pronounced than the $1 trillion figure suggests, given the relative weakness of the Chinese yuan. When calculated by value, China accounts for roughly 15% of global goods exports. But in volume terms, Eskelund estimates that every shipping container being sent from Europe to China is outnumbered by the four containers heading in the other direction. In volume terms, he estimates that China accounts for some 37% of everything being exported in shipping containers.”
• https://www.wsj.com/economy/trade/chinas-exports-rebound-in-november-97f24e06?st=s9TUrb
• USD/CNY Options : Closest significant option expiries for NY cut, based on DTCC data: 7.1088($1.2b). Upcoming Close Strikes : none - BBG
• The USD/CNH Average True Range for the last 10 Trading days: 122 Points
• Data/Event : Money Supply, CPI and PPI are out today with modest improvements forecast for CPI, whilst PPI remains firmly negative.

Fig 1 : USD/CNH Spot Daily Chart

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