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USD Index Loses Moderate Ground, AUD Outperforms

FOREX
  • Currency markets overall have been generally rangebound and trading on light volumes Monday, with CHF marginally the poorest performer and AUD & GBP the strongest. Equities have consolidated a very minor pop off the lows, and the USD index has been consolidating losses of around 0.2% on the session. While the index is softer (against the grain of higher US yields), it remains well within range of the recovery high, and while above 103.99, the short-term outlook remains bullish.
  • EURUSD trades a quarter of a percent firmer despite retaining the S/T bearish outlook for the pair. A reversal lower from here would concentrate markets back on 1.0796 first, the Feb29 low and open the bear trigger further out at 1.0695.
  • AUDUSD is firmer off last week's pullback low, and tech traders will be watching for the imminent formation of a death cross in the pair (50-dma < 200-dma) - the first since April last year, which should indicate short-term momentum in the pair is pointed lower. Notably, the AUD net short position continues to swell - putting AUD net positioning at a % of open interest at the largest short on CFTC records stretching back to the early 90s.
  • However, AUD outperforms to start the week and alongside the Swiss Franc weakness, we highlight the bullish potential for AUDCHF here: https://roar-assets-auto.rbl.ms/files/60505/FX%20Market%20Analysis%20-%20AUDCHF.pdf
  • Fed's Bostic, Goolsbee and Cook made appearances but did little to move the needle at the beginning of a shortened holiday week, largely echoing sentiment from Chair Powell’s post-meeting press conference last week.
  • Second-tier data from the US on Tuesday, with durable goods and consumer confidence scheduled. Perhaps more market attention will be on emerging markets with a rate decision in Hungary tomorrow, before South Africa on Wednesday.
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