Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Dollar steady as services beat lifts sentiment
Markets in Asia are set for a cautious open after a mixed overnight session, with global risk sentiment shaped by resilient US services data and cooler inflation prints out of Europe.
The US dollar held steady, supported by a robust ISM services report, which climbed to a 14-month high at 54.4 in December, defying expectations for a pullback.
US Treasury yields bull-flattened, with the 10-year yield down 3bps to 4.14% and the 2s10s curve flattening by 3.5bps.
US equities reversed from record highs late in the session (S&P -0.3%), as homebuilders slumped on fresh policy headlines targeting large investors in single-family homes.
European core HICP inflation undershot consensus, falling to 2.29% y/y, while headline inflation dipped to 1.96% y/y.
UK Gilts led gains in global fixed income, with 30-year yields dropping 7bps on a favorable supply outlook and weak construction PMI.
USDCNH climbs as job openings hit year low
JOLTS Job Openings dropped to 7.146 million in November, falling short of the 7.648 million forecast. October’s figure was revised lower to 7.449 million. At the same time, quits rose to 3.161 million in December from a revised 2.973 million in October, nudging the quits rate up to 2.0% from 1.9%. November’s job openings marked the lowest level in more than a year.
Looking at APAC FX, USDCNH is now at one-week high.
The next key resistance lies at 50-day EMA of 7.0472, followed by 100-day EMA of 7.0864.
With momentum indicators close to oversold, USD buyers may see an opportunity to step in.
Aussie dollar slips as inflation cool
Australia’s consumer prices eased to 3.4% in November, down from 3.8% in October and below forecasts. The slowdown was driven by Black Friday discounts and cheaper holiday travel, though core inflation stayed above the central bank’s target. The trimmed mean measure came in at 3.2%.
The Aussie dollar fell overnight as it approached overbought levels.
Next key support lies at 21-day EMA of 0.6676, followed by 50-day EMA of 0.6625.
Aussie retreats as RSI peaks
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 10 January
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
