FOREX: Yen Continues To Benefit From Risk Pullback
Currency moves have been muted during today’s APAC trading given Japan, South Korea and Thailand are closed and volumes are generally light. The USD BBDXY index is off its intraday low to be down moderately. A deterioration in risk appetite has weighed on Aussie and Kiwi while benefiting the yen, as China’s December manufacturing PMI printed below expectations and is only just above the breakeven-50 mark.
- The yen outperformed the G10 on Monday and today USDJPY is down 0.3% to 156.40, close to the intraday low.
- AUDUSD is down 0.1% to 0.6215 after a low of 0.6211 earlier as the softer China manufacturing PMI and commodity/equity prices weigh. AUDJPY is 0.4% lower at 97.20.
- Kiwi has underperformed Aussie with NZDUSD down 0.2% to 0.5630 after a low of 0.5627. AUDNZD is 0.1% higher at 1.1040 after falling to 1.1024 early in trading.
- European currencies are little changed with EURUSD at 1.0407 and GBPUSD 1.2549.
- USDCNH fell to 7.3053 after the yuan fixing below Monday’s level. It is now flat on the day.
- Equities are generally weaker with the CSI 300 down 0.6%, ASX -0.9% but Hang Seng up 0.1%. The S&P e-mini is slightly lower. Copper is down 0.3% and iron ore down towards $100/t.
- Germany, Italy, Switzerland, Sweden and Norway have holidays, the UK closes at 12:30 and France at 14:05.
- US October house price data and December Dallas Fed print later.
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Historical bullets
AUSSIE 3-YEAR TECHS: (Z4) Bounce Mode
- RES 3: 96.380 - High Mar 21 2023
- RES 2: 97.190 - High May 5 2023
- RES 1: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- PRICE: 96.090 @ 15:41 GMT Nov 29
- SUP 1: 95.760 - Low Nov 13
- SUP 2: 95.750 - Low 27 Nov ‘23
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Having hit a fresh pullback low at 95.760 across the global rates sell-off in recent weeks, the market found bottom and has staged a shallow bounce above the 96.00 handle. Nonetheless, recent weakness confirms the downside bias, with support undercutting at 95.750 below ahead of major support of 95.480. For any corrective recovery to take hold, markets need to retake the 96.00 handle on a closing basis.
USDCAD TECHS: Pullback Appears Corrective
- RES 4: 1.4287 2.0% 10-dma envelope
- RES 3: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4196 1.764 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4078/4178 High Nov 27 / 26 and the bull trigger
- PRICE: 1.4005 @ 16:09 GMT Nov 29
- SUP 1: 1.3965/28 20-day EMA / Low Nov 25 and a key support
- SUP 2: 1.3858 50-day EMA
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
Trend conditions in USDCAD remain bullish and Tuesday’s fresh cycle reinforced this theme. The move higher confirmed a resumption of the primary uptrend and marked an extension of the bullish price sequence of higher highs and higher lows. Sights are on 1.4196 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. For now, the latest pullback appears corrective.
AUDUSD TECHS: Corrective Bounce
- RES 4: 0.6762 High Oct 9
- RES 3: 0.6733 High Oct 13
- RES 2: 0.6604/88 50-day EMA / High Nov 7 and a reversal trigger
- RES 1: 0.6534/50 20-day EMA / High Nov 25
- PRICE: 0.6512 @ 16:03 GMT Nov 29
- SUP 1: 0.6434 Low Nov 26
- SUP 3: 0.6400 Round number support
- SUP 3: 0.6350 Low Aug 5 and a key support
- SUP 4: 0.6339 Low Nov 10 2023
A bearish theme in AUDUSD remains intact. The fresh cycle low on Tuesday marks an extension of the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350, the Aug 5 low and the next key support. The pair has recovered from its recent lows - a correction. Initial firm resistance to watch is 0.6534, the 20-day EMA.
