JGB TECHS: Trend Needle Points South

• The hawkish reaction to the December Fed decision & SEP, and the associated weakness for equities, have weighed heavily on higher beta currencies, with the likes of AUD and NZD underperforming against the dollar in G10.
• With the moves, AUDUSD is now below 0.6270 and trades at a fresh two-year low. The trend needle in AUDUSD continues to point south and this week’s fresh cycle lows reinforce current conditions. Sentiment may have also been aided by the most recent RBA dovish pivot.
• The move down maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend.
• Below here, attention will be on 0.6210, the Oct 21 ’22 low.

Re increased uncertainty, the only real thing that's happened since the last projections is the election?

• "Actually, that's not the only thing that's happened. Our forecast for inflation for this year I think are five-tenths higher than they were in September. So you had two months of higher inflation in September and October...that might be the single biggest factor, Inflation has once again underperformed relative to expectations."

Q: Does this seem like the dynamic in 2016 when the FOMC saw tighter policy in part in anticipation to the Trump administration's policies?

• Powell says the economy is in a really good place and we think policy is in a really good place. Slower rate cut path is driven by stronger growth, lower unemployment than expected (with less uncertainty), inflation is higher, and higher in the forecasts. We're closer to the neutral rate.
• Powell says that some FOMC members did adjust forecasts based on policy uncertainty: Some people did take a very preliminary step and start to incorporate highly conditional estimates of economic effects of policies into their forecast at this meeting, and said so in the meeting, some people said they didn't do so, and some people didn't say whether they did or not. So we have a people making a bunch of different approaches to that, But some did identify policy uncertainty as one of the reasons for their writing down more uncertainty around inflation.