28th November 2019 - AUD remains range bound near critical supports



Good morning


OVERNIGHT DATA AND HEADLINES


• The USD rose and a gauge of global equities pushed closer to an all-time high after a batch of U.S. economic data brightened the economic outlook.

• Wall Street's main indexes hit record highs ahead of the Thanksgiving holiday. Dow Jones up 5 points (0.02%) at 28,127, S&P 500 up 8 points (0.26%) at 3,148, Nasdaq up 45 points (0.52%) at 8,693.

• Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said in its second estimate of third-quarter GDP. That was up from the 1.9% pace it estimated last month. The economy grew at a 2.0% pace in the April-June period. Economists polled by Reuters had forecast third-quarter GDP growth would be unrevised at 1.9%.

• The central bank's preferred inflation measure, the core personal consumption expenditures (PCE) price index excluding food and energy, increased 1.6% in the 12 months through October. The so-called core PCE price index rose 1.7% in September and has undershot its 2% target this year.

• Orders for non-defence capital goods excluding aircraft surged 1.2% last month, the largest gain since January, after falling 0.5% in September.

• Initial claims for state unemployment benefits declined 15,000 to a seasonally adjusted 213,000 for the week ended Nov. 23, raising concerns of some easing in the labour market.

• Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3% last month as households spent more on electricity and gas, offsetting a drop in new motor vehicle purchases. Spending gained 0.2% in September. When adjusted for inflation, consumer spending nudged up 0.1% in October after gaining 0.2% in September.

• U.S. Beige Book Nov 2019 - Activity expanded modestly from October. The Beige Book, which is a publication about current economic conditions across the 12 Federal Reserve Districts, stated that "Economic activity expanded modestly from October through mid-November, similar to the pace of growth seen over the prior reporting period." Most Districts reported stable to moderately growing consumer spending, and increases in auto sales and tourism were seen across several Districts. In manufacturing, more Districts reported an expansion in the current period than the previous one, though the majority continued to experience no growth. The picture for nonfinancial services remained quite positive, with most Districts reporting modest to moderate growth. Transportation activity was rather mixed across Districts. Reports from the banking sector indicated continued but slightly slower growth in loan volumes. Home sales were mostly flat to up, and residential construction experienced more widespread growth compared to the prior report. Construction and leasing activity of non-residential real estate continued to increase at a modest pace. Agricultural conditions were little changed overall, remaining strained by weather and low crop prices. Activity in the energy sector deteriorated modestly among reporting Districts. Outlooks generally remained positive, with some contacts expecting the current pace of growth to continue into next year.

CURRENCIES


• The USD rose helped by upbeat U.S. data – DXY index was up 0.17% at 98.415.

• CNY inched up, supported by rising trade deal hopes. PBOC set the midpoint rate at 7.0350 however CNY dropped to 7.0200 level.

• EUR saw continued weakness overnight, falling from 1.1015 towards 1.0990 lows.

• GBP rallied, jumping up from 1.2825 up towards 1.2910.

• USD/JPY rallied in the latter part of the NY session, up from 109.10 towards 109.60.

• AUD looked vulnerable, trading lower from a 0.6789 high down to 0.6771.

• NZD also saw selling interest from 0.6430 to 0.6410.

• AUDNZD remained within a 1.0545 / 1.0565 range overnight.

• AUDEUR sat above 0.6150 supports, finding a 0.6168 high.

TREASURIES


• U.S. Treasury yields rose after positive overnight data boosted confidence that the U.S. economy is solid.

• Benchmark 10-year note yields were last at 1.760%, up from 1.740% late Tuesday.

• The Treasury Department sold $32 billion in seven-year notes to strong demand, the final sale of $113 billion in coupon-bearing supply this week.

• The bond market will be closed on Thursday for the Thanksgiving Day holiday.

• Core European government debt yields rose only slightly, with yields on benchmark German 10-year bonds pushing above one-month lows. German 10-year bond yields were up 1 basis point at -0.367%.

COMMODITIES


• Gold fell as equities climbed to record levels bolstered by positive trade deal hoped. Spot gold dipped 0.46% to $1,454 per ounce, slipping five sessions in six.

• Iron ore and steel futures in China declined, extending losses into a second session, as poor industrial profits data highlighted a slowdown in Chinese manufacturing.

• Rio Tinto Ltd said it had approved a $749 million investment in its Greater Tom Price operations to help sustain production capacity in its iron ore business in the Pilbara region of W.A.

• Copper prices hit their highest in nearly three weeks, rising for a fourth day. Benchmark LME copper closed up 0.4% at $5,945 a tonne after touching $5,968, the highest since Nov. 8.

• Oil fell about 1% after a report showing U.S. crude inventories grew unexpectedly. Brent crude fell 45 cents (0.7%) to $63.82 a barrel. WTI crude fell 61 cents (1%) to $57.80 a barrel.


ECONOMIC CALENDAR TODAY


• Australian Economic data today : Q3 private new capital expenditure (last -0.5%, mkt f/cast flat). Mixed result. 2019/20 capex plans.

• New Zealand – Nov ANZ business confidence.

• Europe – Oct money supply, November economic confidence.

• German – Nov CPI

• Thanksgiving day holiday in the U.S.


AUD THOUGHTS


AUD drifted lower overnight finding support at 0.6772 lows on positive U.S. data which in turn ignited a stronger USD across the board. AUD opens this morning at the lower end of 0.6770.

Today we have Australian Q3 private new capital expenditure and 2019/20 capex plans which will keep the market on high alert.

In the U.S. markets will be closed on Thanksgiving holiday. End of month flows could square up ahead of the close on Wall Street.

In the absence of any major or threatening data / news, AUD should hold its recent tight ranges as it awaits any further developments for guidance on direction.


TECHNICAL OUTLOOK


AUD range bound between Fibonacci support at 0.6766 and 10-DMA by 0.6795.

Initial resistance at daily cloud top by 0.6790, 10-DMA at 0.6796, 30-DMA at 0.6841

Daily techs warn shorts, RSI diverges on today's low & Fibonacci level still supports (0.6766).

Immediate resistance comes in at 0.6800 & 0.6810. Longs need above 0.6835/40 resistance in order take some control.



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