NZD: NZD/USD - Extends Above 0.5830, Approaching Pivotal 0.5850-0.5900

The AUD/USD had a range overnight of 0.6421-0.6461, Asia is trading around 0.6460. Some dovish Fed speak on Friday and some headlines that Trump is floating the idea of allowing Nvidia H200 chips sales to China managed a bounce to end the week for risk, albeit from lower levels.  Lets see how risk starts the week, Crypto has had a good bounce over the weekend indicating we might see a constructive open for risk, I would still be wary considering the price action we had last week. The pair had a brief look below the 0.6440-0.6460 area but could not extend, a sustained break below here is needed to target the 0.6350 area. In the Asian session Japan is off today so it might be a quiet start, but should risk manage to build on its Friday close then the AUD/USD could perhaps drift a little higher on the day, but for now I would remain skewed a seller on rallies, first sell zone 0.6500-0.6530.

• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD304m). Upcoming Close Strikes : 0.6450(AUD991m Nov 26), 0.6500(AUD1.07b Nov 26), 0.6535(AUD1.69b Nov 26) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 39 Points
• Data/Event: 

Fig 1: AUD/USD spot Daily Chart

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

The Moody's upgrade to Italy's credit rating announced late Friday was the first from the agency since 2002 but shouldn't be considered a major surprise. Among the 3 major ratings agencies, Moody's had the lowest rating on Italy - by two notches (Fitch and S&P both BBB+). 

• So this upgrade to Baa2 from Baa3 represents something of a closing of that gap rather than a major breakthrough for Italy.
• From the release:
• "The rating upgrade reflects a consistent track-record of political and policy stability which enhances the effectiveness of economic and fiscal reforms and investment implemented under the National Recovery and Resilience Plan (NRRP). It also points to prospects of further policy actions supporting growth and fiscal consolidation beyond the plan's deadline in August 2026. As a result, we expect that Italy's high government debt burden will gradually decline from 2027 onwards."

On the asset side of the Fed balance sheet, we saw a $25B drop in assets, of which just $2B could be attributed to QT in one of its final weeks (ends Dec 1).

• Instead it was a $6B drop in dealer repo operations vs a week earlier, and $17B in "other" areas that aren't related directly to monetary policy and typically don't have any significant impact on the size of the balance sheet (such changes are largely due to items such as bank premises, accrued interest, and other accounts receivable.)
• Discount window takeup edged up $0.3B to $6.1B but remains relatively low.
• QT has totaled just under $21B over the last month, around the expected pace, though as noted this will flatline in December with a pickup in net bills as MBS proceeds are rolled over into T-bills.