FOREX: USDJPY Momentum Stalls Short Of 157.00 Handle Ahead Of FOMC
Dec-10 10:36
- USDJPY momentum stalled on the run-up to 156.95 yesterday, as a EUR-led phase of USD selling across early Europe contained any broader dollar rally. Downward pressure on the JPY continues to be a focus this week, amid the hawkish repricing for core fixed income markets and regional geopolitical uncertainty taking its toll. Key resistance for USDJPY remains at 157.89, the Nov 20 high and bull trigger. Despite a slightly weaker risk backdrop today, cross/JPY remains a notable beneficiary of the overall dynamics.
- The next key driver for the greenback will be today's FOMC, with more attention than usual on the Statement to see how resolute any remaining easing bias is. Forward guidance is likely to be amended to reflect a more patient stance on cuts. As such, the market reaction to the meeting could hinge on how Chair Powell portrays the burden of proof for further easing ahead.
- EURUSD meanwhile has seen an 1.1658 overnight high before this morning’s ECBspeak reaffirmed the idea that the Governing Council deems rates to be “in a good place”, despite Executive Board member Schnabel expressing her comfort with markets pricing the next rate move as a hike earlier in the week.
- Initial resistance comes in at the 50% retracement of the Sep17-Nov 5 bear leg (1.1694), while support is located at the 20-day EMA intersecting at 1.1607. A French Gov't spokesperson acknowledged this morning the 2026 budget may not pass by year-end in the country - further pessimism here despite yesterday's narrow passage of the Social Security Financing Bill would pressure EUR from here.
- Weekly MBA mortgage applications and the Q3 employment cost index are on the calendar ahead of the FOMC. Australian labour market data is scheduled overnight.
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GERMAN T-BILL AUCTION RESULTS: 3/9-Month Bubills
Nov-10 10:33
| Type | 3-month Bubill | 9-month Bubill |
| Maturity | Feb 18, 2026 | Aug 19, 2026 |
| Allotted | E2.275bln | E1.722bln |
| Previous | E2.446bln | E1.78bln |
| Total sold | E3bln | E3bln |
| Target | E3bln | E3bln |
| Avg yield | 1.917% | 1.943% |
| Previous | 1.711% | 1.899% |
| Bid-to-cover | 1.43x | 2x |
| Previous | 1.95x | 1.8x |
| Bid-to-offer | 1.08x | 1.15x |
| Previous | 1.19x | 1.07x |
| Previous date | Oct 20, 2025 | Oct 20, 2025 |
BONDS: Off Lows On Peripheral & OAT Demand Stemming From Risk-On Price Action
Nov-10 10:31
Tentative movement towards the reopening of the U.S. government has boosted border risk sentiment.
- This initially weighed on core global FI markets before outperformance for peripheral EGBs & OATs helped wider core global FI markets off lows.
- Gilt and Bund futures have retraced much of their move lower, while OAT & BTP futures are now higher on the day.
- Bund futures -9 at 129.03 vs. session lows of 128.80. Initial support at 128.96/92 was breached, but Fibonacci support at 128.52 went unchallenged. Bears remain in short-term control.
- German yields are 0.5-1.5bp higher, now bear flattening after bear steepening at the open.
- EGB spreads to Bunds 0.5-2.0bp tighter, OATs outperform with the spread vs. 10-Year Bunds ~77.5bp.
- No outperformance for Greece evident after a move to Positive outlook at Scope Ratings on Friday.
- Gilt futures base at 92.75 before recovering to 93.09, -12.
- UK yields little changed to 0.5bp higher across the curve.
- Short end pricing little changed when looking at the bigger picture. ~40% odds of one further ECB cut priced for this cycle, while GBP markets price ~17bp of easing through year-end and fully discount the next BoE cut come the end of the Feb meeting.
- Little of note on the European & UK calendars today.
- Labour market data (due tomorrow) headlines this week’s UK calendar.
FOREX: Pro-Growth Expectations on Shutdown Optimism Favour AUD, Hamper JPY
Nov-10 10:24
- A pro-growth impulse from expectations for the US government reopen potentially this week has led the USD to consolidate last week's losses. Reactions across G10 do not surprise, with positive risk sentiment apparent through strong equity performance weighing on the low-yielding JPY and CHF while supporting the likes of AUD, NZD and NOK.
- USDJPY subsequently sees renewed upside today, clearing Friday's highs and approaching the Nov 4 high at 154.48, the bull trigger. A break of this level would confirm a resumption of the uptrend and open 154.80, the Feb 12 high. First important support lies much further out at 152.46, the 20-day EMA.
- AUD received further tailwinds from RBA Hauser comments being on the hawkish side. For AUDUSD (+0.68%), a break above key resistance at 0.6618 (Oct 29 high) would be required to reinstate a bullish theme.
- NOK meanwhile also benefits from an upside surprise to domestic October CPI. A December cut was already unlikely following last week's Norges Bank meeting and the prospects of that are likely to fall back even further. EURNOK has extended the pullback from 11.80, potentially forming a double top pattern multi-week.
- ZAR outperforms in emerging market FX, very much a product of the precious metals rally (gold +2%), which adds further support to the positive risk backdrop and consolidating dollar weakness.
- Key to watch in the days ahead will be further developments on the shutdown, with a handful of legislative hurdles still to be met: Senate is yet to formally schedule a vote final passage, and a House vote will have to follow. Comments from Fed’s Daly & Musalem, as well as BoE’s Lombardelli, headline a limited G10 calendar today.
