AUDUSD TECHS: MA Studies Highlight A Dominant Uptrend

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• Despite some notable moves across the G10 on Friday, all the action was a bit of a sideshow compared to the aggressive moves seen in the precious metals space. Spot silver dropped as much as 36%, while gold followed suit by declining 12.75% at its worst point of the session. Headlines suggesting Iran want to make a deal, and the confirmation of Kevin Warsh as President trump’s nomination for the new Fed Chair have driven the dramatic corrections, providing a more constructive backdrop for the USD to recover.
• The USD index is trading around half a percent in the green as a result, with the late derisking leaving the Australian dollar as the worst performing currency in the G10. Declines for AUDUSD total around 1% and look set to end the consecutive winning streak for the pair, having reached as high as 0.7094 this week and trading around 0.6980 as we approach the weekend close. Profit taking dynamics may also be coming into play as we approach next week’s expected RBA hike.
• In similar vein, the likes of EURUSD and GBPUSD are roughly 0.7% lower on the session, while USDJPY has rallied back to 154.50. The removal of Fed Chair noise and intervention speculation may place the spotlight back on Japanese politics as we approach next month’s election. Indeed, the USDJPY recovery is also allowing an oversold position to unwind, with initial firm resistance intersecting at 155.80, the 50-day EMA.
• A 2.3% decline for the South African rand against the dollar is the best reflection of today’s turnaround/correction for precious metals. Today’s recovery has seen USDZAR completely erase the week’s selloff, with the 20-day EMA providing initial resistance around 16.20.
• US ISM Manufacturing PMI data will take focus on Monday, while markets will be attentive to developments over the US government shutdown and any potential comments from both Fed’s Powell and Warsh ahead.

• There appear to be a small improvement in risk appetite over the last few minutes, stocks paring losses (SPX eminis -18.0 at 6974.75 vs. 6917.50 low), US$ scaling off recent highs (BBDXY +7.91 at 1185.81 vs. 1188.31 high), Tsy futures off recent highs, curves twist steeper: 2s10s +4.065 at 70.885 (steepest since January 2).
• No obvious headline driver, markets likely squaring up ahead of the weekend, not to mention potential for month end extensions.