CNH: USD/CNH Remains Wedged Between Key EMAs, China/HK Out Today

In local morning trade, NZGBs are flat to 2bps cheaper, with a steeper 2/10 curve, after US tsys finished last week mostly weaker and near the session’s worst levels. However, light holiday volumes persisted.

• US tsys pared losses on Friday after Wholesale Inventories came out lower than expected with a modest down-revision to the prior, Retail Inventories were in line with expectations, and the Advanced Goods Trade Balance came out a little wider than October's, with the $102.9B shortfall above $98.3B prior (and $101.2B expected).
• US markets will be closed on Wednesday for the New Year's Day holiday; otherwise, they will have full sessions for the week's balance. US Data includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
• The local calendar is empty today and will remain so until the release of CoreLogic Home Values on January 2.
• The NZ-US 10-year yield differential is 3bps lower at -18bps, its lowest level since late 2020.
• Swap rates are 2-3bps lower, with the 2s10s curve unchanged.
• RBNZ dated OIS pricing is little changed. 54bps of easing is priced for February, with a cumulative 125bps by November 2025.

The USD traded in a narrow range on Friday to finish little changed. Aussie underperformed the G10 on Friday, apart from the Swiss franc, pressured by weaker risk appetite, while GBP and SEK outperformed possibly due to year-end flows. 

• USDJPY paused its uptrend to finish down 0.1% to 157.83 after reaching a low of 157.35. It is currently around 157.76. Initial resistance is at 158.08, December 26 high, with support at 155.89, November 20 high. Bullish conditions remain intact with a clear dominant uptrend.
• AUDUSD fell to a low of 0.6201 before recovering somewhat to be down 0.1% at 0.6217, and is currently around this level. Initial resistance is at 0.6337 and support at 0.6199, December 19 low, with the price sequence of lower lows and lower highs continuing. NZDUSD up 0.2% to 05633 left AUDNZD 0.25% lower at 1.1035.
• The pound outperformed with GBPUSD up 0.4% to 1.2578, while EURUSD was flat leaving EURGBP 0.4% lower at 0.8289. A clear breach of 0.8319m 50-day EMA, would undermine the bear theme. While EURUSD is trading above its recent lows, it is still in a downtrend. AUDGBP fell 0.5% to 0.4942, just above the December 18 low of 0.4926.
• Equities were mixed with the S&P down 1.1% but Euro stoxx up 0.8%. Oil prices were higher at the end of last week with WTI up 0.9% to $70.60/bbl. Copper was flat and iron ore is just under $100/t.
• There are no data in Australia/NZ today with the final December Jibun Bank Japan manufacturing PMI and November South Korean November IP the main data releases.

• RES 4: 1.4578 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: 1.4411 @ 16:08 GMT Dec 27
• SUP 1: 1.4301 Low Dec 18  
• SUP 2: 1.4209/4041 20- and 50-day EMA values 
• SUP 3: 1.3928 Low Nov 25 and a key support
• SUP 4: 1.3822 Low Nov 6

USDCAD bulls remain in the driver’s seat and the pair is holding on to the bulk of its recent gains. The recent breach of 1.4178, the Nov 26 high, confirmed a resumption of the uptrend and note 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 1.4209, the 20-day EMA. A pullback would be considered corrective.