CANADA: Q4 GDP Set To Come In Flat-To-Slightly Negative (1/3)

• Treasuries look to finish moderately higher Monday - inside session range on two-way positioning ahead of Wednesday afternoon's FOMC policy annc.
• The Fed appears poised to deliver a neutral hold, with heated debate continuing about the appropriate pace of easing over the coming year. Note, betting markets show swing in Fed chair nominee with current BlackRock fixed income CIO Rick Rieder's implied odds rising to appr 50% as Kevin Warsh declines to 30%.
• Projected rate cut pricing largely steady vs. late Friday levels (*): Jan'26 at -0.7bp, Mar'26 at -4.2bp, Apr'26 at -7.7bp (-8.2bp), Jun'26 at -19.2bp (-18.7bp), first full cut priced in at Jul'26: -26.7bp (-25.2bp).
• Currently, TYH6 trades +5.5 at 111-27 (111-22.5 low / 111-30 high) on 1.3M volume. Initial firm resistance is at the 20-day EMA, currently at 112-03. The 50-day EMA is at 112-11+. The area between the 20- and 50-day averages represents a key resistance zone. For bears, a resumption of the bear leg would refocus attention on the bear trigger at 111-09, the Jan 10 low.
• Headline durable goods orders rose 5.3% M/M (4.0% expected, prior -2.1%) but this is a notoriously volatile series and it was core capital goods orders that truly impressed. They rose 0.7% M/M (0.3% expected) albeit with a 0.2pp downward revision to October's growth (to 0.3%).
• Look ahead to Tuesday: ADP Weekly NER Pulse kicks data off at 0815ET, FHFA House Price data at 0900, Richmond Fed Mfg index along with Conf. Board Consumer Confidence at 1000ET, Dallas Fed Services Activity at 1030Et. Treasury auctions $70B 5Y notes at 1300ET (91282CPW5).

• RES 4: 0.7060 1.764 proj of the Nov 21 - Dec 10 - 18 price swing
• RES 3: 0.7022 1.618 proj of the Nov 21 - Dec 10 - 18 price swing
• RES 2: 0.6991 1.500 proj of the Nov 21 - Dec 10 - 18 price swing
• RES 1: 0.6942 High Sep 30 2024 and a key resistance
• PRICE: 0.6934 @ 16:10 GMT Jan 26
• SUP 1: 0.6834 Low Jan 23 
• SUP 2: 0.6728 20-day EMA 
• SUP 3: 0.6667 50-day EMA 
• SUP 4: 0.6593 Low Dec 18 

AUDUSD gains last week strengthen a bullish theme and highlight an acceleration of the uptrend. Moving average studies are in a bull-mode position too, reinforcing current trend conditions. Sights are on 0.6942 next, the Sep 30 2024 high and a key resistance. The trend is overbought and any pullback would allow this  condition to unwind. Firm support to watch lies at 0.6728, the 20-day EMA. 

Treasury options saw modest put flow on net, SOFR options mixed, two-way, also on lighter volumes ahead of Wednesday's FOMC policy annc. Underlying futures firmer, off late overnight highs, curves bull flatten (2s10s -.973 at 61.937). Projected rate cut pricing largely steady vs. late Friday levels (*): Jan'26 at -0.7bp, Mar'26 at -4.2bp, Apr'26 at -7.7bp (-8.2bp), Jun'26 at -19.2bp (-18.7bp), first full cut priced in at Jul'26: -26.7bp (-25.2bp).

• SOFR Options:
  • +10,000 0QZ6 97.00 calls, 14 vs. 96.645/0.10%
  • +19,000 SFRJ6 97.25 calls, 1.0
  • +45,000 SFRZ6 97.50/98.50 call spds, 3.5 ref 96.74
  • +4,000 SFRG6 96.43/96.50/96.56 call flys, .25
  • +2,000 SFRU6 96.18/96.31/96.43 put trees, 2.75
  • +3,000 SFRM6 96.37 puts, 1.75
  • -3,200 SFRJ6 96.56 calls, 6.25
  • +4,000 0QU6 97.25/97.75/98.25 call flys, 3.0 vs 96.675/0.08%
  • +3,000 SFRZ6 96.00/96.25/96.50 put flys, 4.75
• Treasury Options:
  • 6,000 TYH6 113 calls, 6 ref 111-28
  • -15,000 FVH6 108/108.5 put spds, 7.5 vs. 108-24/0.22%
  • over 5,100 TYH6 112 calls, 24 last
  • +1,500 TYH6 110.75/111.25 put spds, 7 vs. 111-27/0.10%
  • +2,000 wk5 TY 111.25 puts, 3 vs. 111-29/0.08%
  • +2,500 USK6 112 puts, 59
  • 1,600 TYH6 110.75/111.25 put spds ref 111-28
  • -3,000 TYH6 109/112 put spds, 33 vs. 111-27.5/0.51%
  • +4,000 TYK6 112.5 calls, 14 vs. 111-26.5/0.27%