EQUITY TECHS: E-MINI S&P: (M5) Oversold But Remains Bearish

RXJ5 132.50c, bought for 46 in 6k.

• The USD index has spent Monday consolidating its most recent decline near two-month lows. Bullish dollar positioning and notable technical developments are threatening a more protracted move lower for the greenback, and the ongoing strength for equities appears favourable for the likes of AUDUSD.
• Last week, we noted AUDUSD’s first close back above the 50-day EMA since October last year. Since then, the pair has extended higher, eroding the FOMC-induced decline on Dec 18, and now reaching a fresh 2-month high at 0.6374.
• Developments are significant given the RBA is widely expected to ease the 4.35% cash rate overnight, though former staffers point to reservations within the Board regarding the labour market and wages. This may place a degree of uncertainty around the actual decision, as well as a high likelihood that Governor Bullock will attach some hawkish rhetoric to any easing measure, to ward off market expectations of much deeper easing this year. Our full preview is here: https://mni.marketnews.com/40Wnomy
• Above here, 0.6384 (Dec 13 high) and 0.6429 (Dec 12 high) remain the most notable short-term targets for the move. A stronger rally would open 0.6471, the Dec 9 high.

MNI London: Chinese and Australian military officials met in Beijing today for the first Australia-China Defence Strategic Dialogue since 2019. 

• An Australian government statement noted: "...both countries exchanged views on bilateral, global and regional security issues, as well as military transparency and communication. Australia reiterated the importance of all countries in the region operating in a safe and professional manner at all times to avoid the risk of miscalculation or escalation." 
• The Chinese Minister of Defence said in a statement, "both sides agree to continue to strengthen strategic communication in defence, properly handle conflicts and differences, carry out exchanges and cooperation." 
• The meeting is a significant milestone in an ongoing thaw between the two countries, since the election of Prime Minister Anthony Albanese in 2022 and subsequent lifting of trade restrictions in 2024.
• The relationship between Beijing and Canberra is likely to be tested by US President Donald Trump's trade policy, which could seek to disrupt Australia's trade in high-quality iron ore to China.
• The Australian federal election in May also appears set to return the Liberal–National Coalition back to power, and likely bring about a more hawkish China policy.