Generally quiet start to the week with London closed for bank holiday Monday. SOFR and Treasury options saw better downside put trade Monday. Rate hike projections through year end inched higher: Sep 20 FOMC is 22.8% w/ implied rate change of +5.7bp to 5.386%. November cumulative of +16.8bp at 5.496, December cumulative of 16.0bp at 5.489%. Fed terminal climbs to 5.49% in Nov'23.
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USDCAD remains in consolidation mode and is trading above key support at 1.3093, the Jul 14 low. Moving average studies continue to highlight a dominant downtrend. A break of 1.3093 would confirm a resumption of the medium-term bear cycle. This would open 1.3084 and 1.3032, Fibonacci projection points. On the upside, clearance of the 50-day EMA, at 1.3288, is required to highlight a possible short-term reversal.
AUDUSD traded sharply lower Friday, extending the reversal from Thursday’s 0.6821 high. The move down reinforces a bearish theme and note that the pair is trading below both the 20- and 50-day EMAs. This signals scope for weakness towards the next key support at 0.6596, the Jun 29 low. On the upside, key short-term resistance has been defined at 0.6821, where a break is required to reinstate a bullish theme.