FOREX: USD Surges At Monday Open On US Tariff Implementation

• 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. 

• 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

Though volumes waned in the second half, SOFR & Treasury option trade leaned toward upside call structures Friday while underlying futures reversed early support to finish near session lows: TYH5 -5.5 at 108-20.5. 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).

• SOFR Options:
  • -2,500 2QH5 95.87/4QH5 95.75 put spds, 0.0 net steepener
  • +4,000 SFRU5 96.50/97.50 call spds, 10.25 - legged
  • 5,200 SFRF5 95.87/96.00/96.06 broken call flys ref 95.82
  • 2,000 2QF5 96.25/96.37 call spds ref 96.055
  • Block, 3,000 SFRU5 96.31/96.43 call spds, 3.0 ref 96.025
  • 4,000 SFRM5 96.25 calls ref 95.95
  • 3,000 SFRZ5 95.25/95.43/95.75 broken put trees ref 96.07
• Treasury Options:
  • -10,000 wk2 TY 108 puts 7 ref 108-23.5 to -24
  • over 3,000 USG5 111/113 put spds vs. USH5 111 put ref 113-24
  • +17,000 Wednesday wkly TY 109.75 calls, 4 (expire next wk)
  • 3,200 TYG5 111 calls, 7 last
  • 2,600 TYG5 109 straddles
  • 2,000 FVG5 105.75 puts, 10
  • over 10,000 FVG5 106.5/107 call spds vs. 105.75 puts ref 106-12.75