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Options Traders Less Bearish

AUD

After dropping as low as 0.7595 during the Asia-Pac session yesterday, AUD/USD staged a recovery to 0.7636 during the US morning, before pulling back slightly, the pair last trades at 0.7623.

  • Looking at options while AUD is struggling to make headway, options traders are least bearish since mid-February. AUD/USD 25 delta risk reversals have moved up to -0.9100, the still favouring puts but has moved up from around -1.50 at the start of April and is now above its 50-,100-,200-day moving averages. In terms of option expiries, $150m of puts at 0.7530 roll off on Tuesday.
  • Data after market yesterday showed Port Hedland iron ore exports rose to 46.7m tons in March, up from 37.5m in February. Exports to China rose 24.1% on the month. The data indicates robust demand and helped iron ore futures erase losses yesterday and gain for an eighth straight session.
  • From technical perspective AUD/USD is weaker but remains within the recent range and above recent lows. Key support is at 0.7532, Apr 1 low and the outlook remains bearish. The pair has recently breached 0.7563, Mar 25 low and the Feb 2 low of 0.7564. This reinforces a bearish theme following the confirmation of a head and shoulders reversal pattern on Mar 23. The focus is on 0.7517, Dec 22 low. Initial resistance is seen at 0.7680, the 50-day EMA.
  • Markets look ahead to ANZ Roy Morgan Weekly Consumer Confidence today, the highlight will be NAB Business Survey and weekly payrolls data from Australia. The real focus this week will be comprehensive labour force data on Thursday.
  • Fig.1: AUD/USD 25-delta risk reversals

Source: MNI/Bloomberg

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