AUSSIE BONDS: Post-RBA Sell-Off Extends Ahead Of Tomorrow's Jobs Data

The USD/JPY range today has been 153.45 - 154.03 in the Asia-Pac session, it is currently trading around 153.95, +0.35%. The pair initially gapped higher on the Asian open as reports of a potential deal on the US shutdown made the rounds; it has continued to build on these initial gains as these reports of Dems crossing the aisle have been confirmed. USD/JPY found solid demand around the 153.00 area on Friday again, this positive scenario returns the focus back toward the 154-155 area resistance area once more. A sustained break above is needed to potentially see the uptrend regain upward momentum, the focus would then turn toward the 160 area where I would start to become wary of intervention risks.

• "JAPAN PM TAKAICHI:  NOT RULING OUT SALES TAX CUT AS OPTION IN FUTURE, BUT IMMEDIATE PRIORITY IS TO COMPILE PACKAGE OF STEPS TO CUSHION BLOW FROM RISING COST OF LIVING, CHANGING SALES TAX RATE WOULD TAKE TIME, SO DECISION ON WHETHER TO DO SO WOULD NEED TO TAKE INTO ACCOUNT WAGE, INFLATION LEVELS AT THE TIME - [RTRS]"
• MNI: BOJ board members largely agreed on the need to raise the policy interest rate eventually, but saw no urgency to act at the Oct 29-30 meeting, preferring to confirm sustained wage momentum and the firmness of underlying inflation, according to the summary of opinions released Monday.
• Options : Close significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : none - BBG.

Fig 1 : USD/JPY Spot Daily Chart

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

Gold has rallied 1.3% to $4054.0/oz today despite a slightly stronger US dollar, higher yields and a 0.7% rise in the S&P e-mini. It appears to be a delayed reaction to the softer-than-expected November Uni of Michigan consumer sentiment released on Friday. The move may also be in anticipation of the delayed US data printing softer following reports that a deal has been reached to end the US government shutdown impasse. Thus increasing expectations of further Fed easing. 

• Gold broke above initial resistance at $4046.2, 31 October high, opening up $4161.4, 22 October high. It reached a high of $4055.50 but has mainly traded around $4040-4050.
• News from the US says that enough Democrats in the senate will vote to pass a bill to end the government shutdown which is in its sixth week.
• Fed Chair Powell said another rate cut in December is not a given and so the market has around a 60% chance of one priced in with 100% by January. Monetary easing supports non-interest bearing gold.
• The PBoC built its gold reserves in October for a twelfth consecutive month, according to Bloomberg. There was an 8% y/y fall in gold consumption in China in the year to September according to the Gold Association.
• Silver is 1.8% higher at $49.18 but has been unable to break above initial resistance at $49.456, 23 October high. It reached $49.299 earlier.
• Later the Fed’s Daly and Musalem speak as well as BoE’s Lombardelli. There are no material data releases. 

The AUD/USD has had a range today of 0.6483 - 0.6522 in the Asia- Pac session, it is currently trading around 0.6520, +0.40%. A combination of what looks like the end of the US shutdown and better China Inflation data has seen the AUD trade with a clear bid tone to start the week. The AUD/USD has found support and bounced nicely off the 0.6450 area. If risk continues to build on this change in sentiment expect the AUD to remain supported, resistance is around the 0.6550 area. A break above 0.6550 is needed to turn the focus back toward the 0.6650/0.6700 area.

• "SENATE HAS VOTES TO ADVANCE BILL TO END SHUTDOWN" - BBG
• China Inflation: Over the weekend, we had Oct inflation data, which was stronger than expected. Notably, CPI rose 0.2%y/y, against a -0.1% forecast and -0.3% prior outcome. PPI deflation remained at -2.1%y/y, but was a slight improvement on the Sep outcome. On a monthly basis, CPI rose 0.2%, edging up from September's 0.1% growth. Core CPI, which excludes food and energy, rose 1.2% from September's 1.0%, marking the sixth consecutive month of increase and reaching its highest level since Mar 2024
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6560(AUD447m), 0.6615(AUD 464m), 0.6630(AUD462m). Upcoming Close Strikes : 0.6500(AUD1.22b Nov 12), 0.6530(AUD882m Nov 12)- BBG

Fig 1: AUD/USD spot Daily Chart

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