USDCAD TECHS: Through The 50-Day EMA

• RES 4: 1.4140 High Nov 5 and a key resistance   
• RES 3: 1.4051 High Nov 28 
• RES 2: 1.3939/3984 Low Nov 28 / 20-day EMA  
• RES 1: 1.3888 Low Oct 29  
• PRICE: 1.3833 @ 16:55 GMT Dec 9
• SUP 1: 1.3800 Low Dec 08
• SUP 2: 1.3769 61.8% retracement of the Jun 16 - Nov 6 bull cycle
• SUP 3: 1.3727 Low Sep17 
• SUP 4: 1.3682 76.4% retracement of the Jun 16 - Nov 6 bull cycle  

A bear theme in USDCAD remains intact and last Friday’s strong sell-off reinforced current conditions. The pair has breached an important support at 1.3950, the base of a bull channel drawn from the Jul 23 low. The break highlights a stronger bear cycle and signals scope for an extension towards 1.3769 next, a Fibonacci retracement point. Initial firm resistance to watch is 1.3984, 20-day EMA.  

• Treasuries look to finish near late session lows Tuesday, initial impetus after Job openings were far higher than expected in October at 7670k (sa, cons 7117k) and were also higher than presumably expected at 7658k in September data also released today. It’s a marked increase compared to the 7227k seen in August shortly before the government shutdown.
• Treasuries extended lows after a block Sale -6,000 TYH6 112-03, post time bid at 1356:11ET, DV01 $403,000. Treasuries extended session lows following the cross - TYH6 tapped yesterday's low of 112-02.5 (-5.5) - before drawing some support to 112-04.
• Round number support in focus: 112-00, the 1.00 projection of the Oct 17 - Nov 5 - 25 price swing. Clearance of this level would open 111-19, the 1.236 projection.
• Curves flattened (2s10s -1.569 at 57.155, 5s30s -2.681 at 102.702) while forward rate cut pricing projections consolidated ahead what is still expected to be a 25bp cut by the FOMC tomorrow.
• Wednesday's FOMC policy annc, includes summary of economic projections at 1400ET, Chairman Powell press conference at 1430ET.
• Inter-meeting communications reinforced that the FOMC is finely split between those who would ease further and those who are resistant - if not outright opposed - to providing further accommodation. Overall there were no members who became more dovish on the rate outlook since October, while there were signs that at least a few have become more hawkish.

The AUD/USD had a range overnight of 0.6631-0.6654, Asia is trading around 0.6640. The AUD continued to trade with an underlying bid thanks to the RBA yesterday. US yields continue to rise, the US 10-Year is approaching the pivotal 4.20% area as we come closer to the FOMC. The AUD price action remains very constructive and it continues to ignore the pullback in the USD for now. While the AUD remains above 0.6500-0.6550 I suspect dips should continue to be supported. In the Asian session, watch to see if price can continue to hold above 0.6620-0.6630 to rebuild momentum to have another look back toward the 0.6700 area at some point. If that support does not hold I suspect bids will return back towards the 0.6570-0.6600 area. The AUD outperformance is being expressed more clearly in the crosses.

• MNI RBA WATCH: Board Sees 2026 Hike Risks, Cuts Ruled Out. The Reserve Bank of Australia Board sees the balance of risks tilted toward a potential rate hike in 2026 to contain inflation, with cuts firmly off the table, Governor Michele Bullock said, adding that policymakers will reassess the restrictiveness of the 3.6% cash rate in the new year.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD822m). Upcoming Close Strikes : 0.6550(AUD1.59b Dec 11), 0.6650(AUD767m Dec 12) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 40 Points

Fig 1: AUD/USD spot Daily Chart

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