AUSTRALIA: Q4 Retail Volumes Forecast To Post Second Straight Rise
This week’s focus is likely to be on today’s December and Q4 retail sales data as it will be the first release that gives an indication for the outlook for GDP and given recent weakness in consumption.
- Q4 retail sales volumes are forecast to rise 0.8% q/q after 0.5%. This would be the second straight quarterly rise. Bloomberg respondents vary between +0.5% q/q and 1.5%.
- December retail sales are expected to fall 0.7% m/m after rising 0.8% due to the shifting seasonal trends with November discounting front loading festive spending.
- The January Melbourne Institute inflation gauge prints today. It moderated to 2.6% y/y in December from 2.9% but is still above August’s low.
- ANZ-Indeed job ads are also today. They rose 0.3% m/m in December to be higher in three of the last four months. Vacancies are off their peak but remain elevated.
- December building approvals are also out Monday and forecast to rise 1% m/m after falling 3.6% m/m in November. Private homes were down 1.7% m/m.
- On Tuesday household spending for December prints. The series is due to replace retail sales around mid-year. Bloomberg consensus has it rising 0.4% m/m to be up 3.4% y/y after 2.4% in November.
- Final January S&P Global services/composite PMIs are released on Wednesday. They are hovering just above the breakeven-50 level.
- On Thursday, December trade data is out and the surplus is expected to narrow to $6.5bn from $7.08bn.
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USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
US TSYS: Near Late Friday Lows
- Treasury futures looked to finish near late session lows Friday, early support evaporating after the December manufacturing ISM survey beat expectations, but still pointed to soft if improving sectoral dynamics. The headline reading of 49.3 was an improvement from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
- Tsy curves bear steepened briefly before retreating mildly flatter in the second half. In turn, projected rate cuts through mid-2025 look steady to lower vs. this morning's levels (*) as follows: Jan'25 steady at -2.8bp, Mar'25 -13.2bp (-14.4bp), May'25 -17.8bp (-19.5bp), Jun'25 -26.5bp (-28.2bp).
- Focus on next week: economic data and Treasury supply has been moved forward to accommodate next Thursday's "day of mourning" to honor President Carter. The Federal holiday sees most markets closed, the exception so far is CME rates that will operate on a shortened session.
- Next Thursday's weekly jobless and continuing claims will be released on Wednesday according to the Dept of Labor site LINK
