AUDUSD TECHS: Trading Above Support

• Treasuries look finish firmer Monday - holding to a relatively narrow overnight range after extending highs ahead of the NY open amid brief optimism an agreement over Hormuz Strait passage could be near.
• Attn firmly on lower crude (WTI -4.30 at $80.37/bbl currently vs. $78.43/bbl low) after Pres Trump held off on striking Iran over weekend (again) pledging a Hormuz Strait deal is close while Iran denied any such deal or that talks were occurring. Additional comment by Trump in late trade: "Phase one of Iran talks is reopening Strait of Hormuz .. Phase two with Iran is denuclearization, after strait .. Trump, asked on Hormuz: i won't let Iran charge (BBG)".
• TYU6 is near the middle of a wider session range: +13.5 at 108-13.5 (-08.5 low/-17.5 high), yield -0531 at 4.6817%. The contract traded to a fresh cycle low to confirm a resumption of the downtrend and maintain the bearish price sequence of lower lows and lower highs. This paves the way for a move towards 107-29, a Fibonacci projection. Resistance at the 20-day EMA is at 108-25+.
• Treasuries pared gains - extended session lows after better than expected ISM Manufacturing & employment data while prices paid and new orders come out near survey estimates.
• July's ISM Manufacturing report showed strong broad-based improvement, with the headline PMI rising to a 50-month high 55.6 from 53.3 prior (and vs 53.9 consensus). This corroborates other indicators of strong factory activity in the month and while well above-consensus, this had been telegraphed by a 51-month high ISM PMI equivalent in regional Feds' manufacturing surveys for the month.
• No surprises from the final US manufacturing PMI which was only revised a tenth higher to leave it unchanged from June: 53.9 (cons and flash 53.8) in July after 53.9 in June.
• Look ahead: US trade balance, factory orders and JOLTS data are due Tuesday, while US employment is scheduled Friday.

• RES 4: 187.47 High Jul 29 and a key resistance  
• RES 3: 185.21 50-day EMA 
• RES 2: 184.32 50.0% retracement of the Jul 23 - Aug 3 bear leg
• RES 1: 182.46 38.2% retracement of the Jul 293 - Aug 3 bear leg
• PRICE: 180.45 @ 19:59 BST Aug 3
• SUP 1: 179.37 Intraday low  
• SUP 2: 178.82 High Oct 30 2025
• SUP 3: 177.15 Low Nov 10 2025 
• SUP 4: 175.29 38.2% retracement of the Feb 28 ‘25 - Apr 17 bull leg

EURJPY reversed course last Thursday and the sharp sell-off highlights the end of the recent bull cycle - for now. The cross traded to a fresh short-term cycle low Monday, reinforcing a bear threat. Note that 180.81, the Feb 12 low and a key support, has been cleared. This opens 178.82 next, the Oct 30 2025 high. Initial key resistance is 185.21, the 50-day EMA. First short-term resistance is 182.46, 38.2% of the Jul 29 - Aug 3 bear leg.

Treasury's financing requirements for the Jul-Sep and Oct-Dec quarters were broadly in line with expectations, with the most significant surprise being a reduction in the end-year TGA cash target to $850B, vs the current target of $950B.

• For Jul-Sep MNI had estimated that the net borrowing requirement would be raised to around $700B from the May Refunding estimate of $671B; Treasury's August Refunding estimate shows a higher figure, at $739B. Analyst estimates were somewhat split here on whether there would be an increase or a decrease, ranging from around $590B to $800B, with Treasury going toward the high end of that range.
• As Treasury notes for the current quarter, "The borrowing estimate is $68 billion higher than announced in May 2026, primarily due to lower projected net cash flows, partially offset by the higher-than-assumed beginning-of-quarter cash balance.  Excluding the higher-than-assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $87 billion higher than announced in May."
• Treasury's initial estimate for Oct-Dec marketable borrowing is $628B; we penciled in $650B (and sell-side ranged from around $590B to $690B so again within the middle of estimated) though we and most analysts had mostly anticipated an unchanged $950B TGA target.
• We will likely get more color on the TGA target reduction at Wednesday's Refunding announcement.