NZD: NZD/USD - Rejects 0.5800, Price Action Should Encourage Bears
The NZD/USD had a range overnight of 0.5726 - 0.5765, Asia is trading around 0.5740. US yields bounced and the USD is challenging levels last seen in July/August. The NZD ran into solid resistance towards the 0.5800 area, this is the price action the shorts would appreciate. While price remains below the 0.5800/50 area I suspect rallies continue to be faded looking for a potential move back towards the 0.5500/0.5600 area. NZD continues to stand out as a short against a resurgent USD but it is worth noting that because of the size of the market the market can very quickly become all positioned the same way, so I think the USD will need to build on its challenge higher for the NZD to test those lows.
- "NZ OCT. CONSUMER CONFIDENCE INDEX FALLS TO 92.4, NZ OCT. CONSUMER CONFIDENCE FALLS 2.3% M/M: ANZ" - BBG
- MNI INTERVIEW: China To Seek Long-Term US Deal -Senior Advisor. Beijing will seek a longer-term agreement to guarantee stable conditions for trade, potentially opening the way to broader cooperation on major geopolitical issues, a senior Chinese advisor told MNI.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5650(NZD1.05b Nov 4), 0.5675(NZD1b Nov 5), 0.5750(NZD604m Nov 5) - BBG
- Data/Event: Cotality Home Value, RBNZ committee member Prasanna Gai speaks at the Melbourne Annual Macro Policy Meeting.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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USDCAD TECHS: Bull Cycle Remains In Play
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.3968 High May 20
- RES 1: 1.3959 High Sep 26
- PRICE: 1.3929 @ 16:41 BST Sep 30
- SUP 1: 1.3885/3810 Low Sep 25 / 50-day EMA
- SUP 2: 1.3727 Low Aug 29 and a bear trigger
- SUP 3: 1.3689 Low Jul 28
- SUP 4: 1.3637 Low Jul 25
A bullish theme in USDCAD remains intact and the pair is holding on to the bulk of its latest gains. Recent gains have resulted in the breach of a key resistance at 1.3925, the May 20 high and bull trigger. The break confirms a resumption of the bull cycle that started Jun 16. This paves the way for a climb towards 1.4019, a Fibonacci retracement point. On the downside, first key support lies at 1.3810, the 50-day EMA.
US STOCKS: Late Equity Index Rebound
Stocks actually stage late session recovery - as focus turns toward fundamentals instead of political turmoil:
- DJIA up 87.76 points (0.19%) at 46284.74
- S&P E-Mini Future up 27 points (0.4%) at 6719.5
- Nasdaq up 61.3 points (0.3%) at 22588.13
US TSYS: Curves Twist Steeper Heading into Likely Gov Shutdown at Midnight
- US Govt likely to shutdown at midnight tonight - the first time since late Dec 2018 when the government shutterd for 35 consecutive days. Senate majority whip Barrasso: "SENATE TO VOTE THIS WEEKEND ON REOPENING GOVERNMENT", Bbg.
- The BLS plans to postpone key economic releases in the event of a shutdown: "BLS will suspend all operations. Economic data that are scheduled to be released during the lapse will not be released. All active data collection activities for BLS surveys will cease. The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse." LINK
- That said, most of Wednesday's scheduled data should be released as most are generated by non-govt firms, Construction Spending the lone exception tomorrow as the U.S. Census Bureau the source. Updates to follow if/when an announcement of a closing is made.
- Treasuries trading mixed after the bell, curves twist steeper (2s10s +2.591 at 54.207) as Bonds led the decline in the second half, Tsy Dec'25 10Y contract (TYZ5) currently trades at 112-15.5 (-1) on decent cumulative volumes of 1.68M. 10Y yield at 4.1483% (+.0096).
- A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently at 112-10+. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
- Projected rate cut pricing gaining vs. late Monday levels (*): Oct'25 at -24.2bp (-22.7bp), Dec'25 at -44.2bp (-41.3bp), Jan'26 at -53.7bp (-50.7bp), Mar'26 at -64.7bp (-60.9bp).
