AUDUSD TECHS: Off Lows As Correction Extends
- RES 4: 0.6616 High Aug 16
- RES 3: 0.6522 High Aug 30 and Sep 1, and the key resistance
- RES 2: 0.6445/6501 High Oct 11 / High Sep 29
- RES 1: 0.6406 50-day EMA
- PRICE: 0.6336 @ 17:13 GMT Oct 31
- SUP 1: 0.6272/70 Low Nov 3 2022 / Oct 26 and key support
- SUP 2: 0.6215 2.236 proj of the Jun 16 - Jun 29 - Jul 13 price swing
- SUP 3: 0.6170 Low Oct 13 2022 and a key support
- SUP 4: 0.6135 2.50 proj of the Jun 16 - Jun 29 - Jul 13 price swing
Short-term gains in AUDUSD are considered corrective. The trend outlook is bearish and last week’s low print reinforces current conditions. Price has pierced 0.6286, Oct 3 / 13 low. A clear break of it would confirm a resumption of the downtrend and open 0.6215, a Fibonacci projection. Key trend resistance is at 0.6522, Aug 30 and Sep 1 high. Clearance of this level is required to highlight a reversal. Initial resistance is 0.6406, the 50-day EMA.
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US TSYS: Stopgap Funding Bill Passed, US Govt Shutdown Averted, For Now
- Markets are likely to open on a positive tone after Congress passed a stopgap funding bill Saturday evening. The Senate voted to pass the bill on a 88 to 9 margin after the House had voted 335-91.
- Later in the evening President Biden signed the H.R. 5860 bill, "which provides fiscal year appropriations to Federal agencies through November 17, 2023, for continuing projects of the Federal Government and extends several expiring authorities." LINK
- US Treasury Secretary Yellen issued a statement applauding the bipartisan measure to avoid a shutdown.
USDCAD TECHS: Bear Trend Conditions Remain Intact
- RES 4: 1.3805 High Mar 24
- RES 3: 1.3705 Trendline resistance drawn from the Oct 13 2022 high
- RES 2: 1.3593/95 High Sep 12 / 7 and key resistance
- RES 1: 1.3543 High Sep 27
- PRICE: 1.3527 @ 15:53 BST Sep 29
- SUP 1: 1.3417/3381 Low Sep 29 / 19
- SUP 2: 1.3323 61.8% retracement of the Jul 14 - Sep 7 bull leg
- SUP 3: 1.3266 Low Aug 2
- SUP 4: 1.3235 76.4% retracement of the Jul 14 - Sep 7 bull leg
USDCAD remains in a corrective cycle. The short-term outlook is unchanged and a downtrend remains intact - the recent breach of 1.3490, the Sep 1 low, and the move below the 50-day EMA, reinforced a bearish theme. A resumption of weakness would open 1.3323 next, a Fibonacci retracement. Next resistance to watch is 1.3593, the Sep 12 high. Key resistance is at 1.3695, the Sep 7 high.
US TSYS: Tsys Don't Fear the Shutdown, Nor Quarter End For That Matter
- Support for Treasury futures continued to ebb in the second half, bonds steady briefly before climbing again on quarter/month end positioning. Tsys started to consolidate late morning - largely knock-on effect as EGB's pared gains ahead the weekend. Moves not related to impending US Govt shutdown expected to start Sunday.
- Current Dec'23 10Y futures +6 at 108-01.5 vs. 107-26 low, well above initial technical support of 107-05+ 1.382 proj of the Jul 18 - Aug 4 - Aug 10 price swing. Dec'23 30Y futures tapped steady after the bell but rebounded +7 to 113-23 on quarter/month-end extension trade.
- Curves steeper with the short end outperforming, 3m10Y +1.687 at -87.756, 2Y10Y +2.326 at -46.222.
- Treasury futures had extended highs following a raft of in-line data this morning that pointed to cooling inflation metrics heading into the fall.
- Fast two-way trade reported after initial data came out largely in-line:
- Personal Income (0.4% vs. 0.4% est)
- Personal Spending (0.4% vs. 0.5% est, prior up-revised to 0.09%)
- Real Personal Spending (0.1% vs. 0.0% est)
- PCE Deflator MoM (0.4% vs. 0.5% est), YoY (3.5% vs. 3.5% est)
- PCE Core Deflator MoM (0.1% vs. 0.2% est), YoY (3.9% vs. 3.9% est)
- Little observable reaction to lower than est. Chicago PMI (44.1 vs. 47.6 est, 48.7 prior) and after slightly higher UofM consumer sentiment at 68.1 vs. 67.7 est, 1- and 5Y inflation expectations in-line with expectations of 3.2% and 2.8% respectively.
