USDCAD TECHS: Northbound
- RES 4: 1.3192 1.00 proj of the Apr 5 - May 12 - Jun 8 price swing
- RES 3: 1.3113 High Nov 23 2020
- RES 2: 1.3077 High May 16 and the bull trigger
- RES 1: 1.2995 High June 15
- PRICE: 1.2917 @ 17:27 BST Jun 16
- SUP 1: 1.2861/2756 Intraday low / 20-day EMA
- SUP 2: 1.2518 Low Jun 8 and key support
- SUP 3: 1.2459 Low Apr 21
- SUP 4: 1.2403 Low Apr 5 and key support
The USDCAD outlook remains bullish. A fresh short-term trend high yesterday reinforces bullish conditions and any retracements are considered corrective. This week’s gains have resulted in a break of 1.2945, 76.4% of the bear leg between May 12 - Jun 8. The breach also reinforces a bullish theme and signals potential for a climb towards key resistance at 1.3077, the May 16 high. Initial firm support is at 1.2756, the 20-day EMA.
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AUSSIE 3-YEAR TECHS: (M2) Primary Trend Direction Remains Down
- RES 3: 98.350 - High Mar 3
- RES 2: 97.975 - High Mar 16
- RES 1: 97.530 - High Mar 31
- PRICE: 96.950 @ 20:38 BST May 17
- SUP 1: 96.675 - Low May 4 and the bear trigger
- SUP 2: 96.556 - 3.0% Lower Bollinger Band
- SUP 3: 96.412 - 0.5% 10-dma envelope
The primary trend direction in Aussie 3yr futures remains down. The recent recovery is likely a correction. A bearish price sequence of lower lows and lower highs, that defines a downtrend, remains intact. Moving average studies are also pointing south. Attention is on 96.556 - the 3.0% lower Bollinger Band as well as 96.429, the lower band of a moving average envelope. Key short-term resistance remains at 97.530, the Mar 31 high.
CANADA: RBC: Consensus Call For Headline CPI
- RBC look for headline CPI holding steady at 6.7% Y/Y in April, matching March for the highest level since the start of inflation targeting in 1991.
- Downward drivers: Energy price growth slowing as oil prices retreated from a dramatic spike at the onset of the Russian invasion of Ukraine plus expecting the rapid increase in home prices to slow from the rapid pace based on early data from local real estate boards.
- Upward drivers: Food price growth probably accelerated as rising input and transport costs filtered through supply chains along with further reopening pressures in travel and hospitality sector.
US TSYS: Fed Firmly Focused on Inflation
US FI markets hold weaker levels after the bell -- off mid-morning lows when 30YY climbed to 3.1711%, and holding narrow band through the second half.
- Brief dip in Tsy futures after Fed Chairman Powell comment on WSJ interview that the Fed "won't hesitate to raise rates above neutral if needed" to bring inflation down. Levels recovered just as quickly as Chair Powell stuck to the dual mandate boiler plate comments for the most part.
- "What we need to see is inflation coming down in a clear and convincing way," Powell told the WSJ in a webcast. "We're going to keep pushing until we see that. We don't know with any confidence what neutral is, we don't know where tight is," he said.
- Rates traded weaker post-data, retail sales excl autos better than est at 0.6% (0.4% est), control group +1.0% vs. 0.8% est. Yield curves bear flattened: 2s10s -4.454 at 26.172, 5s30s -4.277 at 1.138%.
- StL Fed Bullard comments at EIC conf: 50bp hikes "at coming meetings"; market vol "reflects policy outlook repricing". While Bullard says the Fed has a good plan in place to address inflation -- has yet to mention recession risk for US (did say doesn't think Europe will go into recession). Last week, Bullard stated recession is "not that high for the US" while the "current strong jobs market is not consistent with recession risk.
- Rather large (certainly unexpected by the broader market) corporate issuance with $6B each between United Health Care and Citigroup multi-tranche jumbos later in the second half.
