IRON ORE: +12% From Late June Lows, Other Metals/Steel Also Rallying
The active SGX iron ore contract continues to climb. We were last $113.55/ton, which is above all the key EMAs, while versus late June lows we sit nearly 12% higher. Late May highs for the metal topped out around $122/ton
- Iron ore gains are consistent with the continued track higher in onshore steel and hot rolled coil benchmarks. Copper is also tracking higher, with HG up +5% from recent lows.
- However, recent positive China property equity market sentiment has had little follow through, with broader China equity indices also struggling. Onshore markets may be waiting to see what emerges from the 3rd plenum in the middle of this month.
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GBPUSD TECHS: Fresh Short-Term Trend High
- RES 4: 1.2908 1.382 proj of the Apr 22 - May 3 - 9 price swing
- RES 3: 1.2894 High Mar 8 and a key resistance
- RES 2: 1.2859 1.236 proj of the Apr 22 - May 3 - 9 price swing
- RES 1: 1.2817 Intraday high
- PRICE: 1.2810 @ 06:03 BST Jun 4
- SUP 1: 1.2685/1.2634 20- and 50-day EMA values
- SUP 2: 1.2510 Low May 14
- SUP 3: 1.2446 Low May 9 and a key near-term support
- SUP 4: 1.2423 Low Apr 24
The trend condition in GBPUSD remains bullish. Monday’s rally and print above 1.2801, the May 29 high, confirms a resumption of the uptrend and an extension of the rising price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position, reinforcing current trend conditions. The focus is on a climb towards 1.2859, a Fibonacci projection. Initial support to watch is 1.2685, the 20-day EMA.
AUSSIE BONDS: Richer, Q1 GDP & RBA Gov. Bullock’s Testimony In Parliament Tomorrow
ACGBs (YM +4.0 & XM +6.0) are richer but off the session’s best levels. This retreat aligns with the 1-2bps cheapening observed in US tsys during today's Asia-Pacific session.
- Outside of the previously outlined mixed Q1 GDP partial component data, there hasn't been much in the way of domestic drivers to flag.
- Cash ACGBs are 4-6bps richer with the AU-US 10-year yield differential 2bps higher at -10bps.
- Swap rates are 3-5bps lower, with the 3s10s curve flatter.
- The bills strip has bull-flattened, with pricing flat to +5.
- RBA-dated OIS pricing is 2-4bps softer for meetings beyond September. 6bps of easing is priced by year-end.
- Tomorrow, the local calendar will see Q1 GDP and Judo Bank Composite & Services PMI data alongside RBA Governor Bullock’s testimony before a senate panel.
- The AOFM plans to sell a new 21 June 2034 Green Treasury Bond via syndication next week (subject to market conditions). Commonwealth Bank of Australia; Deutsche Bank; National Australia Bank Limited; UBS AG, Australia Branch; and Westpac Banking Corporation will act as Joint-Lead Managers for the issue.
- Treasury Bond tenders will resume in the week beginning 17 June 2024.
EURUSD TECHS: Bull Flag Confirmed
- RES 4: 1.0981 High Mar 8 and a key resistance
- RES 3: 1.0964 High Mar 13
- RES 2: 1.0933 61.8% retracement of the Dec 28 - Apr 16 bear leg
- RES 1: 1.0916 Intraday high
- PRICE: 1.0909 @ 05:56 BST Jun 4
- SUP 1: 1.0826 20-day EMA
- SUP 2: 1.0788 Low May 30 and a key short-term support
- SUP 3: 1.0766 Low May 13
- SUP 4: 1.0724 Low May 9
EURUSD traded higher Monday, starting the week on a bullish note. The move higher has resulted in a break of 1.0895, the May 16 high and bull trigger. This confirms a resumption of the bull trend and confirms a flag formation on the daily chart. Moving average studies also highlight an uptrend. The break higher opens 1.0933 next, a Fibonacci retracement. Support to watch lies at 1.0788, the May 30 low.
