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(H2) Stabilising


Bias Still Points Lower


Fading Onto Recent Gains


Tsy/Eurodollar Roundup


Remains Above Support

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  • The greenback is broadly stronger to start the week as the USD index shows gains of 0.2%. The strong performance is largely down to firm rallies in both USDCHF (+0.98%) and USDJPY (+0.62%). With Omicron fears subsiding for now, there is a generally supportive tone for risk across the G10 currency space.
  • Initial resistance is seen at 113.74 in USDJPY, the 20-day EMA. A breach would ease bearish concerns and signal a possible S/T base. Key resistance though is unchanged at 115.52, the Nov 24 high.
  • Despite the general US dollar strength, AUDUSD is in firm positive territory to start the week, recovering 0.65%. Broad AUD gains are noted given the significant bounce against the euro and especially the Yen – AUDJPY +1.33%.
  • Naturally, the firmer global equities/oil prices have created more benign conditions for risk-tied FX, however, the outperformance is notable and was likely bolstered by the PBOC easing in the form of a RRR cut. AUDUSD low overnight at 0.6995 came within 4 pips of the November 2020 lows and a key support.
  • The Canadian dollar reacted well to the recovery in crude futures, with USDCAD retreating 0.6%, however NZD underperformed the session, extending the NZDUSD decline to 13-month lows.
  • China trade data overnight along with the December RBA meeting. Germany will post their ZEW sentiment data before Canada’s Ivey PMI. Markets will remain focused on Wednesday’s Bank of Canada meeting before Friday’s release of US CPI.