FOREX: USD - BBDXY Pushes Higher In Asia

The BBDXY has had a range today of 1216.04 - 1218.27 in the Asia-Pac session; it is currently trading around 1218, +0.15%. The USD has drifted higher in our session thanks to demand across USD/Asia, this might be differentiated when London comes in with risk turning higher after opening under early pressure. The USD again found support on Friday in the 1210-1215 area and is looking to build a base from which to move higher. I expect we do some more work around these levels but I would be looking for signs of a base forming from which to potentially move higher again. Short-term the 1221-1222 area remains the pivot on the topside and we would need a move back above there to build for a retest of the 1230-35 area.

• EUR/USD -  Asian range 1.1597 - 1.1625, Asia is currently trading 1.1600. The pair stalled and moved lower after finding some decent resistance toward the 1.1650-1.1700 area. This has been the pivot within the larger 1.1400-1.1900 range over the past few months.
• GBP/USD - Asian range 1.3142 - 1.3176, Asia is currently dealing around 1.3145. I continue to favor fading rallies, as GBP looks to have put in a medium term top. A sustained move back below 1.3080-1.3100 support would see the momentum lower reinstated and focus turn back toward the 1.3000 area. Suspect rallies back toward the 1.3250-1.3300 will be sold into if we see a bounce.
• Cross asset : SPX +0.40%, Gold $4080, US 10-Year 4.144%, BBDXY 1216, Crude Oil $59.57
• Data/Events : France Bloomberg Nov. France Economic Survey, EZ Bloomberg Nov. Eurozone Economic Survey/European Commission Publishes Autumn Economic Forecasts, Spain Bloomberg Nov. Spain Economic Survey, Italy Bloomberg Nov. Italy Economic Survey, Germany Bloomberg Nov. Germany Economic Survey/CPI

Fig 1: BBDXY Spot 4H Chart

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

TYZ5 is trading at 112-17+, +0-00+ from closing levels in today's Asia-Pac session.

• Cash US tsys are 1bp richer to 1bp cheaper, with a steepening bias, in today's Asia-Pac session. On Friday, US tsys finished showing a modest bear-steeper, with benchmark yields 1-4bps higher.
• US equity futures are slightly firmer in today's Asia session. The S&P looked to be rolling over again on Friday night, down almost 1.5% before it found solid demand during the N/Y session and pared back all the day's losses.
• The market will be looking toward the release of some US data this week (September's delayed nonfarm payrolls report for next Thursday) to get a gauge on things and also heavily focused on the upcoming Nvidia results, which will heavily impact the direction of markets this week.
• Friday's Fed commentary (with the usual exception of Gov Miran calling for further easing in December) was roundly hawkish, with Dallas's Logan and KC's Schmid reiterating their opposition to a December rate cut, largely out of concern over entrenched inflation. A December cut remained around 50/50 priced.
• Along with the newly-rescheduled data, this week's calendar includes the October FOMC minutes (we're watching for colour on the debate over whether to ease any further) and flash November PMI data.

The NZD/USD had a range today of 0.5658 - 0.5681 in the Asia-Pac session, going into the London open trading around 0.5665, -0.30%. The NZD/USD has drifted lower in our session being led by the move higher in USD/Asia. The NZD is one of those currencies in which positioning can become an issue because of the size of the market so when it grinds higher like it did at the back of last week while risk turned lower it is price action worth noting. The place to fade NZD again is closer toward 0.5800 should we see that area again. 

• Bloomberg reports: “Nomura Likes Long NZD/USD on Expectation RBNZ Will Hold Rates.  The Reserve Bank of New Zealand will refrain from lowering borrowing costs at its meeting on Nov. 26, even though the market is pricing in a reduction, according to Nomura strategists. “The market has been pricing in too aggressive an easing path for the RBNZ,” they wrote in a Friday note. “The RBNZ has hinted that it sees the activity outlook as having bottomed and that prior easing will start to have a more positive impact on economic momentum.”
• MNI AU -  Oct Services PMI Up But Still Sub 50, Pointing To Tepid Recovery: The Oct services PMI (via BNZ and Business NZ) edged up to 48.7 from 48.3 in Sep. We look to be on a steady improvement trend, but from depressed levels and the index hasn't been above the 50.0 expansion/contraction point since early 2024. The sub indices mostly ticked higher, but also remained under 50.0. Activity was 48.9, versus 48.0 prior, employment up to 48.8, versus 47.9 in Sep. The employment index eased back to 49.5 from 49.7 prior. The outcome doesn't point to a sharp turn higher in early Q4 economic momentum. BNZ noted (via BBG): "Sector continues to struggle for forward momentum with the sub-component gauges all below long-term averages and making for "dreary reading".
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5675(NZD300m Nov 20), 0.5730(NZD434m Nov 19), 0.5835(NZD300m Nov19) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 35 Points

Fig 1: NZD/USD Spot Daily Chart

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