24th December 2019 - AUD rises to its highest level since December 13



Good morning


OVERNIGHT DATA AND HEADLINES


• New orders for key U.S.-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter. Core capital goods orders rose by an unrevised 1.1% in October. Core capital goods orders rose 0.7% on a year-on-year basis in November.

• New home sales rebounded 1.3% to a seasonally adjusted annual rate of 719,000 units last month, lifted by gains in activity in the Northeast and West regions. October's sales pace was revised down to 710,000 units from the previously reported 733,000 units.

• US Durable Goods Orders for November fell by 2.0%, down from +0.2% and well short of expectations of a 1.5% gain. Ex transport also weaker, coming in flat compared to expectations of +0.2%. The Chicago Fed National Activity Index for November meanwhile printed at +0.56 to beat estimates of -0.33

• Canadian GDP for November was -0.1% MoM and +1.2% YoY, weaker than expectations of flat and +1.4% respectively.

• S&P 500 and the Nasdaq hit record highs after President Trump said an initial U.S.-China trade pact would be signed soon. Dow Jones up 0.36% to 28,558, S&P 500 up 0.08% to 3,223, Nasdaq up 0.20% to 8,943.


CURRENCIES


• The U.S. DXY held near a 2 week high but ended lower into the close – DXY down -0.03% at 97.66.

• EUR was up 0.11% to 1.1091

• JPY strengthened 0.05% at 109.40

• GBP fell even lower, trading at 1.2938, down 0.50% on the day.

• CNY inched lower - opened at 7.0080 and was changing hands at 7.0130.

• AUD continued higher overnight, trading up towards a 0.6928 high.

• NZD also continued higher, finding a 0.6638 high from 0.6600.

• AUDEUR remained at lofty levels trading over 0.6250 (0.6255 high).

• AUDNZD fell from 1.0465 highs down towards 1.0425 lows.


TREASURIES


• U.S. Treasury prices slipped, pushing yields slightly higher, in generally thin trading as markets squared up positions into year-end.

• U.S. 10 year yield inched up to 1.922% from 1.917%

• U.S. 30-year bond yields were slightly up at 2.347% from 2.346%.


COMMODITIES


• Gold prices gained on sparse trade ahead of the holiday season - Spot gold was up 0.48% to $1,485 per ounce.

• Shanghai steel futures jumped after key steelmaking cities in Northern China issued pollution alerts to arrest the deteriorating air quality in the region. Prices for spot cargoes of iron ore with 62% iron content for delivery to China fell by $1.5 to $93 per tonne.

• Copper prices held near last week's seven-month high - Benchmark LME copper finished 0.2% higher at $6,190 a tonne, up more than 5% this month in its biggest monthly gain since February.

• Oil prices were little changed as Russia said an OPEC-led producer group may consider easing output cuts next year, offsetting support from some investor optimism that an initial U.S.-China trade deal would be signed soon. Brent crude was up 25 cents, or 0.4%, at $66.39 per barrel. WTI crude was up 11 cents, or 0.2%, at $60.55 a barrel.

ECONOMIC DATA TODAY


• No Australian Economic data today.


AUD THOUGHTS


AUD continued higher towards 0.6928 highs overnight on the back of improved commodities, yield spreads and weaker U.S. data.

AUD has been steadily climbing since a string of downbeat U.S. data (including today's durable goods and housing) have put U.S. dollar longs on the defensive.

Very little in the way of data today with the holiday season now in full swing.

AUD expectations should remain supported on a dip towards 0.6900 while offering interest likely rests in the 0.6930/40 region.


TECHNICAL OUTLOOK

AUD slide halts just short of the 200-DMA (0.6903), bounce ensues as USD trades lower.

Equity gains, bounce in copper, AU bond yield rise help buoy AUD. Nears 0.6920 late in the day; shorts face growing risks.

The combination of those factors should heighten concerns for AUD shorts.

Should AUD close the day above the 200-DMA longs will grow more confident.

AUD's last close above the 200-DMA was on March 14, 2018 and subsequent attempts to close above it since then have failed.

Monthly RSIs show upside momentum remains intact.


A very merry Christmas to you and your families.




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