###POV: DOWNWARD PRESSURE ON AUSSIE LIKELY...>

AUSSIE: ###POV: DOWNWARD PRESSURE ON AUSSIE LIKELY TO CONTINUE, DESPITE JOBS

BOOST. Strong Aussie Labour Market data on Thursday helped push the AUD to the

highest level in a month, dual effecta of weak US CPI figures & dovish FOMC hike

exerted dual effects on AUD/USD. This is contrary to the recent downward trend

that had taken AUD/USD to the lowest levels since June 2017. Weaker AUD is being

driven by divergence in central bank outlook. While RBA Gov. Lowe said in Oct.

that the next rate would be up rather than down, he also said RBA would not be

influenced by other central banks becoming more hawkish. This dovishness & weak

data pushed the AU/US 10-Year spread to lows of 11.5bp, tightest in 17 years.

OIS now price in an 89% chance of hike by end-2018 (67% pre-data). This type of

overreaction is characteristic in OIS markets & typically pares back, which

could see a resumption of trends. From a technical perspective the upward move

in AUD could be shortlived, AUD/USD remains in the downtrend channel from Sept,

and the broader downtrend channel from 2011 is also intact while MNI technical

signals are negative for the pair in the short term. The decline has coincided

with an OI increase in AUD which suggest the market has heavy short positions.