Tensions With China Temper AUD Upside

Fresh tensions with China have seen AUD underperform in Asia. Comments from China's Iron and Steel Association over the weekend said the price of iron ore has diverged from fundamentals, blaming speculation and sparking rumours of intervention in the price of iron ore. The comments saw iron ore futures tumble in Asia, last down around 4.04% in Singapore.

• However, AUD/USD is still comfortably over the 0.75 handle and positive on the session at 0.7540 but has failed to make similar gains to G10 peers against the U.S. dollar.
• There are a few sizable option expiries in AUD/USD this week at the 0.7500 handle; some AUD 1.2b expire on December 16 and AUD $1.4b roll off December 18.
• From a technical perspective the Dec 2 break of 0.7414, Sep 1 high and former key resistance confirmed a resumption of the uptrend that began Mar 19. Moving average studies are also in a bull mode reinforcing current conditions. The focus is on 0.7583, the Jun 14, 2018 high and 0.7638, a Fibonacci retracement. Key short-term support is at 0.7373, Dec 7 low.
• There is a raft of data due from Australia during the week, most notably BA December meeting minutes, weekly payroll data and a speech to be given by RBA's Head of Financial Stability all on Tuesday 15; Westpac leading indexes on Wednesday 16; November employment report on Thursday 17.