GERMAN T-BILL AUCTION RESULTS: 6-month bubill results

• RES 4: 1.3387 High Jul 7 and a key resistance
• RES 3: 1.3361 50-dma
• RES 2: 1.3304 High Jul 10
• RES 1: 1.3251 20-day EMA
• PRICE: 1.3178 @ 16:09 BST Jul 14
• SUP 1: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
• SUP 2: 1.3032 1.764 proj of the Apr 28 - May 8 - May 26 price swing
• SUP 3: 1.2992 50.0% retracement of the 2021 - 2022 bull leg
• SUP 4: 1.2949 2.00 proj of the Apr 28 - May 8 - May 26 price swing

USDCAD traded lower again early Friday before bouncing into the Friday close. The subsequent bounce looks corrective at this juncture, keeping the medium-term trend pointed lower for now. The week’s move lower has resulted in a break of 1.3117, the Jun 27 low. This confirms a resumption of the downtrend that started on Oct 13 2022. The break lower opens 1.3084, and 1.3032, Fibonacci projection points. The 1.0% 10-dma envelope has been pierced for the first time since mid-June, signalling the extent of the current downside momentum. Firm resistance is seen at 1.3251, the 20-day EMA.

• RES 4: 0.7029 High Feb 14
• RES 3: 0.6993 76.4% retracement of the Feb 2 - May 31 bear leg
• RES 2: 0.6936 High Feb 16
• RES 1: 0.6900 High Jun 16 and key resistance
• PRICE: 0.6852 @ 16:07 BST Jul 14
• SUP 1: 0.6784 Low Jul 13
• SUP 2: 0.6713 20-day EMA
• SUP 3: 0.6651 Low Jul 11
• SUP 4: 0.6596 Low Jun 29 and key support

A strong impulsive rally in AUDUSD has resulted in the break of a number of key short-term resistance points this week. The move highlights a stronger short-term bullish theme and price is approaching resistance at 0.6900, the Jun 16 high and a key resistance. A break of this level would open 0.6936, the Feb 16 high. Initial support lies at Thursday’s intraday low of 0.6784. A firmer level lies at 0.6713, the 20-day EMA.

• Treasury futures drifting near session lows after a higher open Friday. Quiet second half trade after US rates mirrored moves in EGBs as Bunds and Gilts also reversed gains into the European close.
• Early volatility FI markets saw fast two-way trade after Import Prices fell 0.2% vs. -0.1 est, while Export Prices receded -0.9% vs. -0.1% est. Bonds lead a reversal to lower levels after initially trading higher.
  
  
• Treasury futures extend lows after preliminary July University of Michigan survey came out stronger than expected across the board: 1Y inflation surprisingly increased to 3.4% (cons 3.1) after 3.3%; 5-10Y inflation increased a tenth to 3.1% (3.0), back at the top end of the 2.9-3.1% range seen since Aug’21 and one tenth off a high since 2011; sentiment also increased to 72.6 (cons 65.6) from 64.4.
  
  
• Curves held mostly flatter, with the exception of 3M10Y +4.050 at -159.157 after flattening sharply Thu. Tsy 2s10s bear flattened over 6bp to -93.643, after climbing to -82.676 high in the prior session.
• Year end rate hike projections firmed up on the heavy short end selling, November cumulative of 32.3bp (vs. 27.2 low Thu) at 5.399%, December cumulative 26.3bp (vs. 19.9bp Thu) at 5.339%. Fed terminal holding at 5.395% in Nov'23.
• Reminder, the Federal Reserve enters policy blackout at midnight tonight, runs through July 27, the day after the next rate announcement.