GOLD: Moves in MACD Look Eerily Like October

Despite the yen giving up most of its gains against the greenback following the publication of the December BoJ summary of opinions (SOO), it has outperformed most of the G10 during Monday’s APAC session. The yen strengthened with the release of the BoJ’s December meeting summary of opinions, which suggested that there are likely to be further rate hikes but it is not on a preset course. It noted that negative real rates are putting downward pressure on the yen and so additional tightening may help to support the currency.

• The BBDXY USD index is off its intraday low of 119.80 to be down slightly today.
• USDJPY fell to 156.06 following the SOO but then rose to around 156.50. The pair is now down 0.1% to 156.39 on Monday.
• Generally G10 currency moves have been muted given limited new information in holiday-affected trading. AUDUSD’s 0.2% rise to 0.6722 was one of the larger moves helped by stronger China/HK equities and commodity prices. It reached a high of 0.6727 after a low of 0.6700. Risk-sensitive Aussie was likely also helped by positive talks between Presidents Trump and Zelenskyy.
• Aussie and kiwi continued to diverge given the differing monetary policy positions. NZD is underperforming with NZDUSD down 0.1% to 0.5832 leaving AUDNZD up 0.2% to 1.1535, close to the intraday high and a new December peak.
• European currencies are generally close to flat with EURUSD at 1.1774 after a high of 1.1786 and GBPUSD 1.3508 off the intraday low at 1.3485.
• Later US November pending home sales and December Dallas Fed manufacturing print.

ACGBs (YM -1.0 & XM flat) are little changed in thin holiday trading.

• Cash US tsys are slightly mixed, with a flattening bias, in today’s Asia-Pac session. Monday's US data sees Pending Home Sales MoM (1000ET), Dallas Fed Mfg Activity (1030). FOMC minutes for the December meeting will be released at 1400ET Tuesday.
• The AU-US 10-year yield differential is at +61bps, near cycle highs.
• The bills strip is slightly cheaper across contracts.
• The AUD trades at its highest level in more than a year, amid weakness in the US dollar and expectations that the RBA will hike interest rates next year. Moves may be exacerbated by thin liquidity.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 37% for February to 96% by June and 158% by December 2026.  

The USD/CNY fix printed at 7.0331, versus a BBG market consensus of 7.0049. This keeps the USD/CNY fixing downtrend firmly intact, with another fresh low back to late Sep 2024. The fixing error stayed elevated at +282pips. USD/CNH is a touch higher post the fixing at 7.0072 after 7.0022, last back near 7.0165, close to Friday’s highs.