BONDS: NZGBS: Bear-Steepener To Start A Holiday Shortened Week
In local morning trade, NZGBs are flat to 2bps cheaper, with a steeper 2/10 curve, after US tsys finished last week mostly weaker and near the session’s worst levels. However, light holiday volumes persisted.
- US tsys pared losses on Friday after Wholesale Inventories came out lower than expected with a modest down-revision to the prior, Retail Inventories were in line with expectations, and the Advanced Goods Trade Balance came out a little wider than October's, with the $102.9B shortfall above $98.3B prior (and $101.2B expected).
- US markets will be closed on Wednesday for the New Year's Day holiday; otherwise, they will have full sessions for the week's balance. US Data includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
- The local calendar is empty today and will remain so until the release of CoreLogic Home Values on January 2.
- The NZ-US 10-year yield differential is 3bps lower at -18bps, its lowest level since late 2020.
- Swap rates are 2-3bps lower, with the 2s10s curve unchanged.
- RBNZ dated OIS pricing is little changed. 54bps of easing is priced for February, with a cumulative 125bps by November 2025.
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USDCAD TECHS: Pullback Appears Corrective
- RES 4: 1.4287 2.0% 10-dma envelope
- RES 3: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4196 1.764 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4078/4178 High Nov 27 / 26 and the bull trigger
- PRICE: 1.4005 @ 16:09 GMT Nov 29
- SUP 1: 1.3965/28 20-day EMA / Low Nov 25 and a key support
- SUP 2: 1.3858 50-day EMA
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
Trend conditions in USDCAD remain bullish and Tuesday’s fresh cycle reinforced this theme. The move higher confirmed a resumption of the primary uptrend and marked an extension of the bullish price sequence of higher highs and higher lows. Sights are on 1.4196 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. For now, the latest pullback appears corrective.
AUDUSD TECHS: Corrective Bounce
- RES 4: 0.6762 High Oct 9
- RES 3: 0.6733 High Oct 13
- RES 2: 0.6604/88 50-day EMA / High Nov 7 and a reversal trigger
- RES 1: 0.6534/50 20-day EMA / High Nov 25
- PRICE: 0.6512 @ 16:03 GMT Nov 29
- SUP 1: 0.6434 Low Nov 26
- SUP 3: 0.6400 Round number support
- SUP 3: 0.6350 Low Aug 5 and a key support
- SUP 4: 0.6339 Low Nov 10 2023
A bearish theme in AUDUSD remains intact. The fresh cycle low on Tuesday marks an extension of the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350, the Aug 5 low and the next key support. The pair has recovered from its recent lows - a correction. Initial firm resistance to watch is 0.6534, the 20-day EMA.
EURJPY TECHS: Southbound
- RES 4: 167.40 61.8% retracement of the Nov 11 - Aug 5 bear leg
- RES 3: 165.04/166.69 High Nov 15 / High Oct 31 and the bull trigger
- RES 2: 164.76 High Nov 20 and a key short-term resistance
- RES 1: 160.71/162.58 High Nov 27 / 20-day EMA
- PRICE: 158.62 @ 16:01 GMT Nov 29
- SUP 1: 158.15 Low Nov 29
- SUP 2: 157.87 76.4% retracement of the Sep 16 - Oct 31 bull cycle
- SUP 3: 157.05 Low Sep 18
- SUP 4: 155.15 Low Sep 16 and a key support
EURJPY remains soft and the cross is again trading lower, today. The cross has cleared a number of retracement points and sights are on 157.87, the 76.4% retracement of the Sep 16 - Oct 31 bull cycle. A break of this level would strengthen a bearish theme and open 155.15, the Sep 16 low. Initial firm resistance to watch is 162.58, the 20-day EMA. A breach of this EMA is required to signal a reversal.
