FOREX: USD - BBDXY Trading Heavy After Breaking Below 1210
The BBDXY has had a range today of 1205.87 - 1206.88 in the Asia-Pac session; it is currently trading around 1206, +0.05%. The unexpected dovish tilt from the FOMC has put the USD firmly back under pressure and this move had another extension lower overnight after breaking below the 1210 support. If the market has read the FOMC correctly the USD could be in some trouble here as it looks to reassert the downtrend. On the day look for resistance again back towards the 1209-1212 area where sellers should remerge initially, looking for a test of the overnight lows. Support is in the 1204/05 area; a move below here would target 1198-1200.
- EUR/USD - Asian range 1.1731-1.1746, Asia is currently trading 1.1735. The pair has broken higher as the USD comes back under pressure. On the day, dips toward 1.1690-1710 should be supported initially, looking to retest above the 1.1750 area again.
- GBP/USD - Asian range 1.3386-1.3400, Asia is currently dealing around 1.3390. The pair stalled above 1.3400 overnight but still trades underlying bid for now. On the day GBP should see support back toward the 1.3325-1.3345 area, looking for a retest of the highs seen above 1.3400.
- Cross asset : SPX -0.05%, Gold $4270, US 10-Year 4.16%, BBDXY 1206, Crude Oil $58.05
- Data/Events : Germany CPI, France CPI, Spain CPI
Fig 1: BBDXY Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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NZD: Asia-Pac: NZD/USD Drifts Back Toward 0.5650
The NZD/USD had a range today of 0.5648 - 0.5660 in the Asia-Pac session, going into the London open trading around 0.5650, -0.10%. The NZD has given back most of its overnight gains. The NZD does stand out as a vehicle to express a short in but should this bout of improved risk sentiment grow it will be tough for the NZD to ignore it and it could play catch up to the move at some point, if you feel this bounce in risk will fail and move back lower then the NZD remains a great way to express that. I still suspect any decent bounce will again attract sellers though. The first sell area on a pullback would be around 0.5750 and then the more pivotal 0.5850 area. Dips on the day toward 0.5630-40 needs to hold for the short-term retracement to potentially extend, through here and the focus returns back to making new lows.
- "GOLDMAN PUSHES BACK ITS CHINA RATE CUT FORECASTS BY ONE QUARTER, GOLDMAN NOW SEES CHINA DELIVER CUTS TO POLICY RATE, RRR IN 1Q" - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5600(NZD538m), 0.5800(NZD461m). Upcoming Close Strikes : 0.5380(NZD460m Nov 13) - BBG
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
JPY: Asia-Pac: USD/JPY Moves Back To Re-Test The 154.50 Area
The USD/JPY range today has been 154.05 - 154.45 in the Asia-Pac session, it is currently trading around 154.40, +0.20%. The pair drifted higher in our session as it had another look back toward the 154.50 area. The return of a positive sentiment in risk has brought the focus in USD/JPY back to the 154-155 resistance area. A sustained break above here is needed to potentially see the uptrend regain upward momentum, through here the focus would then turn toward the 160 area where I would start to become wary of intervention risks. On the day a break above the 154.50 resistance that has capped recent moves should see it turn toward the 155.00 area. Look for dips back toward 152.00 and then the more important 149.00-150.00 area to be well supported.
- Nick Timiraos published an article in the WSJ on a fractured Fed, “Fed officials are fracturing over a December rate cut after inflation-focused hawks pushed for a pause after last month's rate reduction. Officials are divided on three questions that come down to judgment calls: Will tariff-driven cost increases truly be a one-off? Does weak hiring reflect a demand slump or reduced supply? Are rates still restrictive?”
- “The answers can lead to very different views of which poses the greater threat—persistent inflation or a sluggish labor market—and how to calibrate risk tolerance.”
- Options : Close significant option expiries for NY cut, based on DTCC data: 152.00($668m). Upcoming Close Strikes : none - BBG.
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia-Pac: AUD/USD Drifts Lower
The AUD/USD has had a range today of 0.6520 - 0.6532 in the Asia- Pac session, it is currently trading around 0.6520, -0.10%. The AUD/USD has drifted sideways in our session consolidating its gains above 0.6500. The AUD will be one of the main beneficiaries while this positive sentiment dominates the market. The AUD/USD needs a sustained push above the 0.6550 area for the focus to turn back toward the 0.6650/0.6700 year highs. Look for intra-day dips toward 0.6480-0.6500 to be supported if this move higher is to come to fruition.
- MNI AU - Strong Home Lending May Contribute To Extended RBA Hold. The RBA noted this month that “the housing market is continuing to strengthen, a sign that recent interest rate reductions are having an effect”. The lending data is consistent with this and likely to add to its caution about easing further.
- Hauser Says RBA Debating Current Policy Stance - Per RTRS: Headlines have crossed from an Rtrs interview with RBA Deputy Governor Hauser. Rtrs notes: "A top Australian central banker said on Wednesday that there was increasing debate about whether the current cash rate of 3.6% is restrictive enough to keep inflation in check, adding that the question is critical for the policy outlook."
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD1.37b), 0.6530(AUD 939m). Upcoming Close Strikes : 0.6520(AUD852m Nov 13), 0.6750(AUD2.17b Nov 14) - BBG
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
