OIL: Crude Falls Sharply On Ukraine Peace Prospects & US Stock Build

The USD has softened in early Asia Pac dealings, as headlines crossed from BBG which suggested the incoming Trump administration is discussing a gradual tariff hike plan. 

• BBG notes: "Members of President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month...One idea involves a schedule of graduated tariffs increasing by about 2% to 5% a month." Such a plan would be aimed at increasing negotiating leverage, whilst avoiding a spike in inflation, BBG note's (see this link for more details). Still, the report notes Trump hasn't reviewed or agreed to the plan.
• FX moves aren't dramatic so far, but markets continue to display sensitivity to tariff related headlines as we approach Trump's inauguration date.
• AUD/USD has ticked up to 0.6175/80, from the low 0.6160 region. NZD/USD is back to 0.5580/85. USD/CNH is back under 7.3500, off close to 50pips. USD/MXN is holding under 20.70.   USD/CAD was last near 1.4370/75.  Follow through has been limited.

• The AUD/NZD closed unchanged on Monday, with the cross continuing to trade in very narrow ranges. There hasn't been much to mention over the past 3 month as the cross trades between 1.1000-1.1100, while the AU-NZ 2yr swap remains trading near its highest levels for the past year, although fell 4bps overnight.
• Initial resistance is 1.1100 (round number), with a break here opening a move to 1.1150 (July Highs), to the down side a break below 1.1056 (20-day EMA), would open a move to retest 1.1000 which has acted a key support for the past 3 months.
• RBNZ dated OIS currently pricing in 47bps of cuts at the Feb meeting, while RBA Dated OIS is pricing in a 67% chance of a 25bps cut in Feb.
• Today we have Westpac Australian Consumer Conf at 1030 AEST 

• NZD/USD edged slightly higher on Monday, closing the session +0.22% at 0.5569, rebounding from multi-year lows but remaining under bearish pressure. The RSI at 31 signals persistent oversold conditions, while a weakening MACD suggests limited bullish momentum
• Technical indicators suggest bearish momentum, with spot trading below all key moving averages, the pair is at risk of testing the 13-year low of 0.5470 if it breaks below 0.5500. Initial support is 0.5543 (Jan 10 lows), while to the upside a break above 0.5643 (20-day EMA) before any sort of momentum change can occur.
• The NZ-US 2yr swap rose 6bps on Monday, closing at -87.5bps. On Friday it hitting a new yearly lows of -95.5bps just off all time lows of -100bps
• NZIER's Quarterly Survey of Business Opinion shows improved business confidence in Q4, with a net 16% of firms expecting economic improvement and 9% anticipating better trading in Q1. However, challenges persist, as 26% reported worse trading conditions in Q4, while 15% expect to raise prices in Q1.
• Leveraged funds raised their net short position on the NZD to 13,547 contracts a 15% jump from prior, the most in more than five years, while Asset managers saw 3% just in short positions, according to the latest Commodity Futures Trading Commission data for the week ended Jan. 7.
• No large nearby strikes Tues. Upcoming notable strikes: 0.5875 (NZD606m Jan. 15), 0.5885 (NZD453.7m Jan. 16), 0.6075 (NZD425.8m Jan. 15)
• The local calendar is empty today