GBPUSD TECHS: Resistance Remains Exposed

• RES 4: 137.75 Low Dec 10            
• RES 3: 135.15 High Dec 13 
• RES 2: 133.26 20-day EMA
• RES 1: 131.71/132.57 High Jan 9 / 6                
• PRICE: 130.76 @ 05:43 GMT Jan 13
• SUP 1: 130.58 Low Nov 6 ‘24 and a key support (cont)     
• SUP 2  130.44 Low Jul 5 ‘24 (cont)            
• SUP 3: 130.23 Low Jul 3 ‘24 (cont)
• SUP 4: 130.00 Psychological round number      

The trend in Bund futures remains bearish and last week’s extension reinforces this theme. The contract has cleared key support at 132.00, the Nov 6 low. The clear break of this level strengthens a bearish theme. Sights are on the 130.00 handle next. Key short-term resistance is at 133.26, the 20-day EMA. Gains would be considered corrective and allow an oversold condition to unwind.

Asian markets declined as stronger-than-expected US jobs data dampened hopes for further Fed rate cuts, with the MSCI Asia Pacific Index down 1.1% and benchmarks in Hong Kong, Taiwan, and South Korea leading losses. Chinese stocks extended declines despite record-high exports, with investors awaiting more pro-consumption policies. Brent crude rose above $81 a barrel after aggressive US sanctions on Russia, adding inflationary pressure for central banks. 

• India's Nifty 50 and Sensex slumped to multi-month lows, pressured by surging oil prices, rising Treasury yields, and weak earnings growth, with financial services stocks driving the decline.
• GS strategists remain bullish on Chinese stocks, predicting a 20% rise by year-end despite recent market turmoil. They expect sentiment and liquidity to improve by late Q1 2025 due to better tariff and policy clarity. Goldman recommends government consumption proxies, exporters benefiting from a weaker yuan, and select tech, infrastructure, online retail, media, and healthcare stocks, while upgrading consumer services to overweight.
• Apple's Chinese suppliers saw their shares drop after analyst Ming-Chi Kuo projected 2025 iPhone shipments at 220-225m units, below Wall Street's 240m consensus. Apple shares fell 2.4% on Friday following the report. Key suppliers, including AAC Technologies (-3.8%), Hon Hai (-4.1%), Quanta (-3.7%), and GoerTek (-2.6%), experienced declines here in Asia
• Traders now expect limited Fed rate cuts in 2025, with fed fund futures now pricing in just a single rate cut around the Oct/Dec meetings the markets remain cautious ahead ahead of key US inflation data this week.
• APAC markets: Japanese equities closed, South Korea's KOSPI is -1%, KOSDAQ -1.20%, Taiwan's TAIEX -2.10%, Hong Kong's HSI -1.15%, China's CSI 300 -0.45%, Australia's ASX200 -1.30%, New Zealand's NZX50 -0.55%

The USD remains on the front foot, particularly against GBP and EUR, which typically don't move much during the Asia Pac time zone. The USD BBDXY index was last above 1321.7, above intra-session highs from Friday's US session. 

• As the session has unfolded GBP losses have accelerated. GBP/USD was last near 1.2130/35, off a little over 0.60% and the worst G10 performer so far today. This is fresh lows in the pair back to 2023.
• There don't appear any fresh catalysts for the move, other than continuation of losses from last week, amid financial stability/twin deficit concerns.
• EUR/USD is back to 1.0210, testing under Friday lows as well. This puts the pair back to levels last seen in 2022. We are around 0.30% weaker against the USD. SEK is off around 035% as well, last near 11.26 against the USD.
• AUD and NZD initially showed some resilience but this hasn't been sustained. AUD/USD was last sub 0.6135, fresh lows back to 2020. NZD/USD is close to 0.5550. We had Australian and NZ data prints, but they didn't shift the sentiment needle.   
• Equity sentiment has been weak throughout the region, following losses in US markets on Friday (weighed by higher US yields post NFP). There has been no US Tsy cash trading so far today, with Japan markets out.
• Yen is benefiting from the risk averse tone, with USD/JPY upticks towards 158.00 sold. We were last near 157.50, around 0.15% stronger in yen terms.
• There were a raft of headlines earlier around PBoC support for the yuan, but this didn't support CNH greatly.
• Looking ahead, it is relatively quiet with just NY Fed 1-Yr Inflation Expectations & Federal Budget Balance on tap.