USDJPY TECHS: Continues To Appreciate
- RES 4: 136.04 1.382 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 3: 135.15 High Jan 31 2002 and a key congestion area
- RES 2: 135.00 Psychological round number
- RES 1: 134.48 1.236 proj of the Feb 24 - Mar 28 - 31 price swing
- PRICE: 133.98 @ 11:38 BST Jun 8
- SUP 1: 131.87 Low Jun 7
- SUP 2: 130.43/129.29 Low Jun 6 / 20-day EMA
- SUP 3: 127.09/36 50-day EMA / Low May 24 and key support
- SUP 4: 125.09 Low Apr 14
USDJPY continues to climb. The pair has this week resumed its primary uptrend, following the break of 131.35, May 9 high. The extension maintains the broader bullish price sequence of higher highs and higher lows and with moving average studies pointing north, indications are that the USD has further to go. The focus is on 134.48, a Fibonacci projection. Initial firm support is seen at 129.29, the 20-day EMA.
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US 10YR FUTURE TECHS: (M2) Fresh Cycle Lows
- RES 4: 121-24 50-day EMA
- RES 3: 122-12+ High Apr 4
- RES 2: 121-09 High Apr 14 and a reversal point
- RES 1: 119-17/120-18+ 20-day EMA / High Apr 27
- PRICE: 117-12 @ 11:27 BST May 9
- SUP 1: 117-08+ Intraday low
- SUP 2: 116-28 0.764 proj of the Mar 7 - 28 - 31 price swing
- SUP 3: 116-20 2.0% 10-dma envelope
- SUP 4: 116.00 Round number support
Treasuries remain bearish and have traded to a fresh trend low today. This confirms a resumption of the primary downtrend and an extension of the price sequence of lower lows and lower highs. Note that recent corrections have tended to be shallow and this also clearly highlights current bearish market sentiment. Sights are on 116-28 next, the 0.764 projection of the Mar 7 - 28 - 31 price swing. Key short-term resistance is 120-18+, Apr 27 high.
BOND SUMMARY: EGB/Gilt: Sovereign Curves Steepen
European government bond curves have steepened at the start of week, driven largely by the longer end selling off. Equities have sold off, commodities are broadly lower and the dollar has gained against G10 FX.
- The Fed's progressive tightening, Covid lockdowns in China, the ongoing push by Western states to weaken the Russian economy and the BoE's warning last week of a potential UK recession, have all contributed to the deteriorating global economic outlook. Meanwhile, concerns over the persistence of inflation are keeping fixed income under pressure.
- Gilts have sold off sharply, particularly at the longer end. The 2s30s spread has widened 8bp.
- The bund curve has twist steepened 9bp.
- The OAT curve has traded in a similar manner with the 2s30s spread pushing up 7bp.
- BTP yields are now up 5-9bp on the day with the belly of the curve underperforming.
- Supply this morning came from Germany (Bubills, EUR1.445bn allotted). Later today France will offer EUR1.6-2.8bn of BTFs.
GILTS: UK 10yr highest since November 2015
- Gilt is off the low, but the 10yr yield still printed another multi year high, highest since November 2015.
- 2.100% = 116.62
- 2.150% = 116.14.
Looking further out, the 2015 peak is at 2.212%, and this would equate to 115.53.
Chart source: MNI/Bloomberg
