• AUD/USD rallied sharply in Asia with help from USD/CNH fall to 7.3350

• AUD/USD rallied 0.6175-0.6207 in overnight trading, NY opened near 0.6180

• Commodity , equity gains also helped pair trade higher

• Softer US yields & AUD/JPY gains added buoyancy to AUD/USD

• Pull back from overnight high aided by US$ buying in Europe's morning

• AUD/USD traded up only +0.08% in early NY & techs had a bearish lean

• Pair below 10-DMA, monthly RSI falling, long upper wick on daily candle

• US Dec. PPI, remarks from Fed's Schmid, Williams are risks Tuesday
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.2175 after failing to vault 1.2250 (Asian session peak)

• 1.2175 is intra-day low, and 50% retracement of 1.2100-1.2250

• US PPI data due at 1330 GMT: 0.3% MM, 3.4% YY f/c; core f/c 0.3% MM, 3.8% YY

• Hotter than expected PPI prints could depress GBP/USD towards 1.2100

• 1.2100 was Monday's 14-month low, after USD rose on strong US jobs data

• CFTC data showed net GBP long position persisted in week ended Jan 7

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• GBP/USD displaying over sold values on the daily chart and a hammer candle

• Monday's recovery from 1.2100 formed the hammer reversal warning

• The candlestick signal will need bullish confirmation

• The underlying bear trend is still intact while below the 10DMA, 1.2359

• Fourteen day momentum is looking stretched and RSI is still at 70.00

• Tempted to go long but will wait for stronger reversal signalsGBP/USD Trader: [page:2338]
GBP/USD daily candle chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own.)

• EUR/GBP was capped by a 76.4% Fibo retracement level Monday, 0.8424

• The 200-day moving average the key level bind at 0.8426

• Our corrective short play from the high is in the money

• However, the pullback to 0.8386 looks tentative at best

• Strong weekly picture argues for cutting the trade early

• We might also consider a stop and reverse just above the 200DMAEUR/GBP Trader: [page:2343]
EUR/GBP daily candle chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own.)

• AUD/USD rises to 0.6207 as report about U.S. tariff plan weighs on USD

• Bbg-Trump team studies gradual tariff hikes; one idea involves 2-5% a month

• 0.6207 is highest level since Thursday (0.6206 was Friday's high)

• Gradual U.S. tariff hikes might be less disruptive than a sudden tariff hike

• 0.6131 was Monday's 57-month low for AUD/USD, after strong U.S. jobs data

• U.S. PPI data due at 1330 GMT: 0.3%, 3.4% YY f/c; core f/c 0.3% MM, 3.8% YY

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable rose to 1.2250 in Asia as dollar fell on report about U.S. tariffs

• Bbg-Trump team studies gradual tariff hikes; one idea involves 2-5% a month

• 1.2250 is highest level since Monday's 14-month low of 1.2100

• Gradual U.S. tariff hikes would be less disruptive than sudden tariff hikes

• Trump will be inaugurated as U.S. President next week (Jan 20)

• 1.2266 (Friday's pre-NFP low) and 1.23 are resistance levels beyond 1.2250

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX Option strikes expire at 10-am New York/15:00 GMT - Tuesday January 14

• EUR/USD: 1.0200 (3.6BLN), 1.0250 (610M), 1.0275 (620M)

• USD/CHF: 0.9050 (640M)

• GBP/USD: 1.2200 (241M), 1.2295-1.2300 (300M)

• AUD/USD: 0.6225 (324M). USD/CAD: 1.4300 (517M)

• USD/JPY: 156.50 (800M), 157.00 (475M), 159.00 (591M)

• AUD/JPY: 99.00 (1.8BLN)(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Shares of Catalyst Metals rise as much as 1.2% to A$3.055, their highest level since Nov. 25

• The gold producer says an Australian regulator approved the underground mining proposal at Trident Gold Project in Western Australia

• Says final approval required to commence mining, the open pit mining proposal is pending

• Co says Trident's pre-production costs are estimated at A$15 mln ($9.28 mln)

• Stock gained 220.5% in 2024

($1 = 1.6160 Australian dollars)
(Reporting by Jasmeen Ara Shaikh in Bengaluru)

Synopsis:

RBC has revised its Fed forecast, now projecting no further cuts in 2025. Following the strong US jobs report, they believe the Fed has already reached the terminal rate for this cycle at 4.25-4.50%.

Key Points:

1. Change in Fed Call:

   • RBC’s US team previously anticipated a final rate cut in January, bringing the terminal range to 4.00-4.25%.
   • Based on recent economic data, they now believe the terminal rate has already been achieved at 4.25-4.50%.

2. Impact of US Labor Data:

   • The strong December employment report highlighted the resilience of the labor market, prompting this revision.
   • Robust hiring trends and moderate wage growth indicate that the Fed's current policy stance remains appropriate.

3. Outlook for 2025:

   • The Fed is unlikely to make additional cuts in 2025, maintaining a cautious approach amid economic resilience and persistent inflation risks.

Conclusion:

RBC's shift reflects confidence that the Fed's current terminal rate sufficiently addresses economic conditions, suggesting a prolonged pause on further easing through 2025.

• Trades off 0.05% at the base of a 1.0241-1.0280 range after early volatility

• Report Trump advisors are mulling gradual tariff hikes saw a late USD dive

• Move was short-lived, but Trump policy uncertainty suggests more volatility

• Rehn - ECB to end policy restriction by midsummer - tariffs cloud outlook

• Charts - daily momentum studies ease, 21-day Bollinger bands slide

• 5, 10 & 21-DMAs slip, weekly moving averages fall - negative trending setup

• Friday's 1.0312 top, then last week's 1.0437 high are initial resistance

• 1.0195 0.618% of 2022/2023 rise then Monday's 1.0177 base are first supports

• 1.0250 561 mln and 1.0275 620 mln are the close strikes for Jan 14th
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• +0.05% at the base of a 1,2203-1.2250 range after an early USD-led spike

• USD spiked on a report Trump advisors are mulling gradual tariff hikes

• UK firms cut headcount late last year in response to tax hike, BCC survey

• Survey joins a slew of similar responses to the Fin Min Reeves budget

• Charts - mixed daily momentum studies, 21-day Bollinger bands expand

• 5, 10 & 21-DMAs slide - weeklies remain bearish - a strong negative setup

• Targets a test of the 1.2038 Oct 2023 low, then the 1.1805 2023 low in March

• Friday's 1.2322 high then the 1.2464 well-tested 21 DMA are first resistance

• A close above the 1.2465 21-DMA would be a positive signal
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Despite higher US rates, USD/JPY on back foot since Friday

• US rates higher yesterday before pushing down, Tsy 2s @3.375%, 10s @4.766%

• USD/JPY 156.92-157.95 yesterday, off from 158.88 spike high Friday

• Asia 157.13-47 EBS so far, closer to lows seen yesterday

• IMM CTA data show market now short JPY, caution keeping USD/JPY capped?

• Downside likely limited with US yields firm, range base around 156.00

• Double bottom in area - 155.97/156.02 lows Dec 20/31, also 156.25 Jan 6

• Japanese importer, maybe investor demand eyed into today's Tokyo fix

• Tech resistance from 157.69 200-HMA, 55/100-HMAs above at 157.78/94

• Option expiries today 155.80 $596 mln, 156.50 $800 mln, 157.00 $475 mln

• And 157.60-85 total $444 mln, 158.00-10 total 376 mln

• Related comments , , ,

• And , , , also

• US markets , , ,

• On the US economy ,

• On IMM CTA positioning , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries to Thursday:


JGB-US Treasury 10-year interest rate differential:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• +0.3% - volatile 1.0245/80 range in very early Asia with the USD -0.35%

• USD volatility may be on reports Trump is studying gradual Tariff hikes

• ECB chief economist Philip Lane suggests a cautious approach to rate cuts

• There is no tier one Eurozone data or ECB events today - USD to lead EUR/USD

• Charts - daily momentum studies ease, 21-day Bollinger bands slide

• 5, 10 & 21-DMAs slip, weekly moving averages fall - negative trending setup

• Friday's 1.0312 top, then last week's 1.0437 high are initial resistance

• 1.0195 0.618% of 2022/2023 rise then Monday's 1.0177 base are first supports

• 1.0250 561mln and 1.0275 620mln BLN are the close strikes for Jan 14th
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD up 0.2%, rallies further in Asia after closing 0.45% higher Mon

• Boosted by technical buying ahead of strong Fibonacci support at 0.6099

• China measures to bolster CNY, better-than-expected China data lift AUD

• Upside limited as U.S. 10-year yield hovers near 14-month high

• Growing likelihood of RBA 25 bps Feb rate cut will also limit AUD recovery

• 0.6099 loss, 76.4% of 0.5510-0.8007 rally, opens 0.5980 April 2020 low

• Intermediate supports 0.6150-55, 0.6130, resistance 0.6200, 0.6220-25

• Asia range 0.6175-0.6196; Monday global range 0.6131-0.6177
AUD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

Synopsis:

ING highlights that the ongoing strength of the USD and firm US yields are creating financial pressures globally, with intervention risks looming for JPY and AUD as key battlegrounds emerge.

Key Points:

1. USD Strength and Global Pressure:

   • The USD’s extended strength and firm US yields are testing financial systems, particularly in China and Japan.
   • UK asset markets are also showing strain, while China's USD/CNY onshore rate is pressing the upper +2% trading band around the daily PBoC fixing.

2. China’s Policy Response:

   • The PBoC is introducing measures to support the renminbi, including:
     • A large sale of CNH bills planned for this week to drain liquidity.
     • Relaxation of macro-capital measures allowing Chinese corporates and financial institutions to raise more funds overseas.
   • December trade data revealed a massive $105bn surplus, potentially drawing commentary from President-elect Trump amidst looming tariffs.

3. JPY Resilience:

   • The Japanese yen is holding steady, supported by:
     • Threats of BoJ FX intervention in the 158/160 area.
     • A 52% market-implied probability of a 25bp BoJ rate hike on 24 January.
   • Defensive currencies like JPY and CHF are expected to outperform on crosses.

4. AUD and Commodity Currencies Under Pressure:

   • Commodity and emerging market currencies are facing significant pressure from the USD and higher US rates.
   • AUD/USD is nearing the 0.60 level, raising speculation over possible Reserve Bank of Australia intervention.

Conclusion:

USD strength is exposing vulnerabilities in global financial systems. While JPY and CHF may find support as defensive currencies, risks of intervention loom for both JPY and AUD as pressure mounts in key markets like China.

• AUD/USD opens 0.35% higher after steadying Mon on perception drop over done

• Strong support at 0.6100, over-sold indicators slow downtrend

• Better-than-expected China trade data, measures to defend CNY buoy AUD

• Elevated U.S. yields, robust U.S. economy limit recovery potential

• U.S. 10-year yield hits 14-month high on doubts over further Fed rate cuts

• U.S. inflation, Australia employment, China data, Fed comments key this week

• Clear break of 0.6099, 76.4% of 0.5510-0.8007 post-COVID rally opens 0.5980

• Resistance 0.6170-80, 0.6200, 0.6220-25; Monday range 0.6131-0.6168
AUD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• GBP$ holds slight loss in NY afternoon -0.2% at 1.2170; NY range 1.2177-00

• Series of 4-consecutive lower low, lower highs hints at offered tone

• Pair opened NorAm at 1.2110 amid UK fiscal angst, rising UK gilt yields

• High gilt yields, low political confidence hurt sterling

• Pair boosted off early lows as gilts slip from recent trend highs

• UK fiscal uncertainties, higher funding costs, Trump tariffs, weigh on GBP

• UK's Starmer forced to defend finance minister, fiscal rules; mkts skeptical

• GBP$ supt 1.2100 Mon low, 1.2070 Oct 27 '23 wkly low, 1.20 psychological lvl

• Res 1.220 psychological lvl, 1.2236 Monday high, 1.2323 Daily high Jan 10

GBP Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Synopsis:

Morgan Stanley expects UK headline inflation to decline slightly to 2.5% year-on-year (YoY) in December, driven by easing core inflation, while fuel prices provide a partial offset.

Key Points:

1. Headline Inflation:

   • Forecasted to decrease to 2.5% YoY in December, down from 2.6% YoY in November.

2. Core Inflation:

   • Expected to fall to 3.3% YoY, compared to 3.5% YoY in the prior month.

3. Fuel Prices Impact:

   • Fuel prices are projected to contribute positively, but this is not sufficient to offset the decline in core inflation.

Conclusion:

The slight moderation in headline inflation reflects a broader trend of easing price pressures, primarily in core components, as the UK economy navigates through persistent economic challenges.

(Updates)

• Shares of gold miners down, tracking a fall in prices of bullion [GOL/]

• Spot gold down 0.9% to $2,666.36/ounce, after dropping as low as 1% earlier in the session

• Gold prices dipped as the U.S. dollar soared to an over two-year high after a robust jobs report last week cemented expectations the Federal Reserve will proceed with caution with cutting interest rates this year

• Top miner Barrick Gold down 1.4%

• U.S.-listed shares of South African miners AngloGold Ashanti and Sibanye Stillwater each down 1%

• Shares of Canadian miners Agnico Eagle Mines and Kinross Gold down 2.4% and 3.3%, respectively

• Mali's government initiates provisional order to seize gold stocks at Barrick Gold's Loulo-Gounkoto site; company warns it may have to suspend operations at the complex

(Reporting by Pooja Menon in Bengaluru)

Synopsis:

BofA sees continued downside pressure on the CHF in 2025, driven by rate differentials and weak inflation data, but questions the SNB's capacity to effectively weaken the currency at the lower bound of policy rates.

Key Points:

1. Carry-Driven Weakness:

   • Swiss inflation data reinforces the case for further SNB easing as global markets question broader easing trends.
   • Carry remains the primary driver for CHF depreciation, with Swiss rate dynamics pointing to further downside risks.

2. Challenges for the SNB:

   • With the policy rate nearing its terminal level, the SNB faces challenges in meaningfully weakening the CHF to stimulate inflation.
   • Traditional FX interventions may lose effectiveness, requiring alternative technical market measures.

3. USD/CHF Outlook:

   • The pair remains positioned for upside as global rate differentials favor the USD, providing a "clean" directional bias in the near term.

Conclusion:

BofA highlights CHF’s vulnerability to carry-related dynamics but emphasizes the need for innovative SNB strategies to achieve inflation targets as conventional policy tools become constrained.

Jan 13 (Reuters) - With EUR/USD falling to a new 26-month low on Monday, and a test of parity and possibly below looking likely, counter-trend investors see no need to be brave just yet.

U.S. Treasury yields extended their uptrends which drove broad based dollar buying which helped depress EUR/USD through 1.02.

The dollar's yield advantage over the euro increased as German-U.S. 2-year spreads widened while terminal rate spreads for the Fed and ECB widened to -198bps.

The EUR/USD drop helps to intensify technical signals which highlight downside risks.

The pair pierced the 61.8% Fibonacci retracement of the 0.9528-1.1276 rally, and a monthly inverted hammer candle in place for January.

Those signals reinforce bearish signs from EUR/USD trading below the falling 5- and 21-day moving averages, as well as signs from falling daily and monthly relative strength indices which are not oversold and imply downward momentum remains.

Investors are now focused on U.S. December PPI, CPI and retail sales data this week, which will indicate if inflation could be returning and also the health of the American consumer.

Hotter than expected data could see investors price out expectations for a lower Fed Funds rate, and possibly begin pricing in a rate hike.

The dollar would likely get another boost if so, which could deflate EUR/USD through 1.00 and towards the 76.4% Fibo of 0.9528-1.1276 which sits near 0.9940.
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Synopsis:

Despite EUR/USD starting 2025 under pressure due to economic and policy divergence, Credit Agricole argues that parallels to the energy-driven lows of 2022 are unwarranted.

Key Points:

1. Economic and Policy Divergence:

   • European economic concerns, coupled with potential US trade tariffs, have underscored cyclical and policy divergence.
   • A dovish ECB contrasts with a more neutral Fed, weighing on EUR/USD.

2. Energy Concerns vs. 2022:

   • Rising European gas prices, driven by reduced Russian supplies and falling storage levels, mirror past fears but lack the same disruptive potential.
   • Sovereign credit risks tied to energy markets are less likely to resurface compared to three years ago.

3. Relative Valuation Support:

   • EUR/USD appears undervalued based on relative commodity terms of trade between the Eurozone and the US, providing a buffer against further downside.

Conclusion:

Credit Agricole believes comparisons to 2022’s EUR/USD lows are overblown, citing diminished systemic energy risks and improved relative valuation metrics as stabilizing factors.

Synopsis:

Goldman Sachs advises against further selling of GBP, citing potential for recovery in risk appetite, fiscal risk moderation, and delayed positive growth data as supportive factors.

Key Points:

1. Risk Appetite Recovery:

   • Recent GBP weakness is partly driven by broader risk-off sentiment in FX markets.
   • A rebound in global risk appetite could provide support to GBP.

2. Fiscal Risk Premium:

   • Macro conditions and evolving net supply dynamics suggest eventual compression of fiscal risk premium in gilts.
   • This should reduce perceived fiscal risks for the currency.

3. Growth Data Lag:

   • While UK growth momentum has recently softened, upcoming data reflecting increased government spending and investment could surprise positively.
   • These improvements are not yet fully visible in the current market sentiment.

Conclusion:

Goldman Sachs recommends caution on further GBP downside in the near term, citing supportive factors that could stabilize or improve the currency's outlook.

• AUD/USD hit 0.61625 in Asia, sellers emerged, 0.6131 traded in Europe

• NY opened near 0.6145, traded close to flat in early NY action

• US yield , US$ gains & AUD/JPY, stock drops weighed on AUD/USD

• Pair traded to a fresh 4-1/2-year low before bouncing towards flat

• Australia yield , commodity gains helped the bounce

• Techs are bearish; RSIs falling, monthly inverted hammer in place for Jan.

• US December PPI & CPI are major data risks for later this week
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)