Making Sense

Form a main idea and anticipate what may change to reverse the idea The main idea here is for the current trend in USD index to continue. As China is out for national  day Golden week, expect USDCNH to be range bound. Moves in AUDUSD are likely to be the result of the broad USD move or large surprises in Services and Composite PMI data and AUD trade data.  RBA Rate decision - Michelle Bullock's first policy statement was largely unchanged from the Sep meeting. RBA kept the interest rate unchanged at 4.10% as uncertainties regarding the lag effects of monetary policy and uncertain economic outlook continue to weigh on decision making. Inflation continues to be elevated with price pressures on goods inflation easing while prices of some services and oil continuing to rise. RBA expects inflation to decline to within the 2-3% range in late 2025 and U/R to gradually rise to 4.50% late next year.  AUDUSD broke the recent 46 day, 32 trading day 0.6360 - 0.6500 consolidation rang...

AUDUSD has been consolidating in a wide range of 0.6625 - 0.6800. Break below 0.6625 on 26 April to lows of 0.6574 saw strong buying interest come in. Full time 27100 jobs lost;U/R 3.70%,part time jobs added 22800, estimates were for a net addition of 25000; wage price index rose 0.80% qoq (Previous 0.90%qoq);  3.7% Est 3.6% Prior 3.40%. Markets are pricing in peak terminal rate of 4.10%, 25 bps hike from current level of 3.85%. AUDUSD faces crosswinds from CNH depreciation while sharp up move in Copper prices, Iron ore and natural gas prices make the outlook a bit cloudy. I would prefer to stay away from the pair till either a more conclusive technical picture present itself or there is a fundamental catalyst.  Important Resistance - 0.6708 / 0.6748 / 0.6793 Important Support - 0.6625 / 0.6575 / 0.6525

In yesterday's trade, headline US retail sales grew 0.40% mom following a downwardly revised -0.70% mom for the month of March. The number was below market consensus for a 0.80% mom increase. Retail sales number after contracting in the month of Feb and Mar 23 turned positive in April. The core retails number or the control group numbers which show non discretionary spending rose 0.70% mom following a downwardly revised March figure of -0.40%. This number was sharply higher than consensus estimates of 0.30% increase. Despite the headline surprising to the downside, resilience of the core retail sales saw US treasury yields move higher as despite the negative shock and tightening credit conditions, consumer spending strength held. 2Y US Treasuries moved higher a full 16 bps to 4.12% before closing the session at 4.09% and 10Y US Treasuries moved 12 bps higher to 3.57% before closing the session at 3.54%. Remember, we are watching the formation of a H&S pattern on US Treasury yie...