JGB TECHS: (M2) Fades Off Key Resistance
- RES 3: 151.13 - High Mar 3
- RES 2: 150.44 - High Mar 14
- RES 1: 150.14/17 - High Apr 1 and key resistance / Intraday high
- PRICE: 149.68 @ 15:29 BST Jun 07
- SUP 1: 148.96/72 - Low May 10 / Low Mar 29 and the bear trigger
- SUP 2: 148.69 - 3.0% Lower Bollinger Band
- SUP 3: 148.16 - 1.0% 10-dma envelope
The primary downtrend in JGBs remains intact, with prices resuming their drift at the beginning of this week. Price is returning lower after rejecting a challenge of key resistance at 150.14, Apr 1 high. A clear break of this level would signal scope for a stronger corrective cycle and open 150.44, the Mar 14 high. Further downside would signal a resumption of bearish activity and open 148.96 and major support at 148.72.
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JGB TECHS: (M2) Trend Condition Remains Bearish
- RES 3: 151.13 - High Mar 3
- RES 2: 150.44 - High Mar 14
- RES 1: 150.14 - High Apr 1
- PRICE: 149.05 @ 16:54 BST May 6
- SUP 1: 148.72 - Low Mar 28
- SUP 2: 148.69 - 3.0% Lower Bollinger Band
- SUP 3: 148.01 - 1.0% 10-dma envelope
The primary downtrend in JGBs remains intact although the recovery across the second half of April has given bears pause for thought. Nonetheless, the trend breach the 61.8% Fib for the 2015 - 2020 rally at 149.65 continues to weigh on prices and spells further losses toward 148.69/148.01, which marks both the 3.0% Lower Bollinger Band as well as the 1.0% 10-dma envelope. Resistance is at 150.14, Apr 1 high.
AUSSIE BONDS: Futures Respect Friday’s Lows
YM & XM respect their post-Sydney lows at the re-open, with most of Friday’s after hours bear steepening intact as the former trades -4.0 and the latter -9.5. Participants face the same competing forces as are seen in the U.S. Tsy space i.e. risk negative weekend headlines vs. reaction to Friday’s NY price action.
- The Bill strip runs -1 to +1 through the reds.
- The local docket is non-existent today, with a lack of notable domestic weekend news flow evident, meaning that wider forces and flows will likely drive price action during the first Sydney session of the week. Domestic risk events to keep tabs on this week include, CBA household spending data (Tuesday), the monthly NAB business survey (Tuesday), retail sales ex-inflation (Tuesday), Westpac consumer confidence (Wednesday) & an appearance from RBA Deputy Governor Bullock on a panel discussion at the Regulators 2022 (FINSIA) (Friday). Elsewhere, as we noted on Friday, there will be a slightly more active AOFM issuance slate this week.
NZD: Kiwi Remains Heavy
NZD/USD holds a fairly tight range. It has traded with a mild bearish bias this morning, but May 5/two-year low of $0.6393 has remained intact thus far. The rate last deals at $0.6399, down 12 pips on the day.
- Bears need a retreat towards support area at $0.6385-77, which limited losses in Jun 2020, to confirm that they are having the upper hand. A break here would bring May 29, 2020 low of $0.6169 into play. Bulls need a rebound above May 5 high of $0.6568 to get some reprieve.
- Fonterra lowered its 2021-22 milk price forecast to NZ$9.10-9.50/kg milksolids from NZ$9.30-9.90 owing to "a number of recent events which have resulted in short-term impacts on global demand for dairy products." The revision comes on the back of sharp declines in prices at the most recent GDT auction and as the current season draws to an end. Note that the mid-point of the revised price range would still be a record high.
- Focus turns to card spending (Tuesday), inflation expectations (Thursdy) & BusinessNZ M'fing PMI (Friday).
