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US TSY OPTIONS

BLOCK, Oct 5Y Puts

BUNDS

2s/10s steepest since

US TSY OPTIONS

Background on Large 5Y Put Buy

EQUITY TECHS

E-MINI S&P (Z1): Watching The 50-Day EMA

BUNDS

Quick tech - At new intraday low

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The greenback continued its move lower on Thursday following the FOMC rate announcement earlier this week. AUD/USD rose as high as 0.7413 before paring the move, finishing the session at 0.7396. The pair last up 5 pipis at 0.7401.

  • From a technical perspective AUD/USD continues to trade within its recent range. The trend outlook remains bearish. This follows the recent breach of a channel base, drawn from the Feb 25 high. Despite the fact that price is back inside the channel area, the move lower marks an important technical break, signalling potential for 0.7235 next, a 1.236 projection of the Feb 25 - Apr 1 - May 10 price swing. On the upside, initial resistance to watch is at 0.7429, Jul 19 high.
  • It will be the COVID situation that dominates the local headline flow once again on Friday, while lower iron ore could also provide headwinds. CBA says "AUD is rebounding despite the tighter restrictions on movement in parts of Sydney (which is a risk to construction) and gradually easing iron ore prices (albeit from high levels). As we discussed here, we expect the regulatory net to tighten in China. That is a risk to local government financed infrastructure spending which is so important to commodity demand. A more broad‑based regulatory crackdown will likely accelerate foreign equity investment outflow from China and lead to a weaker CNH. Significant weakness in CNH can also weigh on AUD because of its role as a proxy for emerging Asia."
  • The local data docket will be headlined by private sector credit for June and Q2 PPI data.