CNH: USD/CNH Back Close To Friday Session Highs
The early tone to USD/CNH has been to the upside in Monday trade, but we remain well within recent ranges. The pair last tracked close to session highs in the 7.1430/40 region (high of 7.1438). This is +0.20% firmer versus NY closing levels from Friday. We remain sub Friday session highs of ~7.1445. A move above this level may see the market target a move back to 7.1500, at least on a short term basis. Friday's low rest around ~7.1040.
- The market may be disappointed at the margins by the lack of fresh stimulus measures/details from Friday's state council meeting.
- There have also been a few sell-side China growth downgrades in the aftermath of weaker than expected May activity figures in recent sessions, which could also be weighing. Headlines have also crossed this morning from Goldman's around further policy easing forecasts for Q3/Q4 of this year.
- Today US Secretary of State Blinken meets with China's Wang Yi at 9:30am local time. A Blinken meeting with China President Xi Jinping would likely spur further positive China asset sentiment from the perspective of US-China relations, but nothing has been confirmed, at this stage, that a meeting will take place.
- The USD/CNY fixing is also coming up, but the trend has been close to expectations in recent weeks.
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USDCAD TECHS: Bullish Short-Term Theme
- RES 4: 1.3695 High Mar 28
- RES 3: 1.3668 High Apr 28 and key resistance
- RES 2: 1.3640 High May 3
- RES 1: 1.3568 High May 15
- PRICE: 1.3520 @ 16:33 BST May 19
- SUP 1: 1.3404 Low May 16
- SUP 2: 1.3363/15 Low May 11 / 8
- SUP 3: 1.3302 Low Apr 14 and a key near-term support
- SUP 4: 1.3275 Low Feb 14
USDCAD remains above Tuesday’s low. The recovery from the May 8 low eased recent bearish pressure and the pair has traded through the 50-day EMA, currently at 1.3513. A clear break of this average would strengthen the case for bulls and signal scope for a climb towards resistance at 1.3668, the Apr 28 high. Key support lies at 1.3302, the Apr 14 low. A break would reinstate the recent bearish theme.
US STOCKS: Stocks Off 3M Highs as Debt Ceiling Talks Hit Snag
Stocks see-sawing in modestly weaker territory after posting the best levels since early February in the first half as debt ceiling negotiations hit a snag in late morning trade.
- "GOP DEBT NEGOTIATORS SAY WHITE HOUSE NOT BEING REASONABLE .. and GOP NEGOTIATORS LEAVE DEBT TALKS" Bbg have triggered late morning unwinds with SPX E-Mini Futures down 11.25 points (-0.27%) at 4205; DJIA down 131.31 points (-0.39%) at 33457.23; Nasdaq down 44.1 points (-0.3%) at 12652.15.
- No substantive reaction to a policy panel event with Fed Chairman Powell, former chair Bernanke highlighting "key issues in monetary policy and the economy and facilitate discussions on the challenges faced by monetary policymakers.
- Echoing previous comments - tighter credit conditions "weigh on economic growth hiring and inflation. As a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals."
- At the moment: Emini futures have breached key resistance and the bull trigger at 4206.25, the May 1 high. Clearance of this level confirms an extension of the bull trend from Mar 13. This opens 4244.00, the Feb 2 high and the next key short-term resistance. Key support is at 4062.25, the May 4 low. A move through this level would highlight a bearish threat.
AUDUSD TECHS: Key Support Remains Exposed
- RES 4: 0.6921 High Feb 20
- RES 3: 0.6861 50.0% retracement of the Feb 2 - Mar 10 bear leg
- RES 2: 0.6824 High Feb 24
- RES 1: 0.6705/6818 50-day EMA / High May 10
- PRICE: 0.6664 @ 16:26 BST May 19
- SUP 1: 0.6605 Low May 18
- SUP 2: 0.6565 Low May 10 and the bear trigger
- SUP 3: 0.6547 61.8% of the Oct - Feb bull cycle
- SUP 4: 0.6403 76.4% of the Oct - Feb bull cycle
AUDUSD maintains a softer tone following the pullback from 0.6818, the May 10 high, and price is trading closer to this week’s lows. A bearish continuation would expose key support at 0.6565, the Mar 10 low. Clearance of this level would confirm a resumption of the bear cycle that started Feb 2 and highlight a range breakout. On the upside, a breach of 0.6818 is required to reinstate a bullish theme and this would expose 0.6861, a Fibonacci retracement.
