FOREX: USD Index Close To Cycle Highs, A$, NZD & CAD Around Session Lows
The USD remains on the front foot, the BBDXY index up over 1%, last near 1322. This is just short of levels above 1323, which have marked highs back to 2022.
- AUD and NZD are marginally the weakest performers at this stage. AUD/USD is down to 0.6110, which were levels last seen in 2020. NZD/USD is around 0.5535, but hasn't tested sub 2022 lows near 0.5500 yet. Both currencies are around 1.75% weaker so far today.
- We just had the Caixin manufacturing print for China which was below forecasts at 50.1, against 50.6 expected. Earlier Australian data was better than expected from a retail sales standpoint, but this has had little lasting impact on AUD.
- EUR/USD is near 1.0235/40, comfortably above 1.0141, which was recorded not long after today's open, no doubt when liquidity has been lighter. Earlier remarks from Trump reiterated recent threats on tariffs against the EU, stating they were definitely happening but not providing a time line. EUR options activity has been dominating so far, although with a mixture of strike levels above and below current spot levels.
- Trump also stated in the earlier remarks he will speak to the leaders of Canada and Mexico Monday morning local US time. This remark saw a brief dip in USD/CAD, but moves under 1.4700 have been supported. We were last around session highs at 1.4750.
- Markets will be hoping such calls lead to negotiations and lowered tariff levels. USD/CAD FX options activity has been skewed towards higher USD call levels
- USD/JPY is higher, back to 155.80, up around 0.40%, so still outperforming broader USD gains. The rise up in US yields at the front end, is helping US-JP 2yr differentials, but back end yields are down slightly. US equity futures remain in the red. Regional equity markets are mostly down as well.
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Historical bullets
JGB TECHS: (H5) Returns Lower
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 144.48/146.53 - High Nov 11 / High Aug 6
- PRICE: 142.12 @ 15:01 GMT Jan 03
- SUP 1: 141.65 - Low Dec 30
- SUP 2: 141.56 - 1.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
Markets slipped on the hawkish Fed and are yet to fully recover, touching 141.65 on the way lower. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
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.
