BUNDS: A busier US Day on the Data front
- This was an incredibly tight 5 ticks range for the German Bund Overnight and under 4k lots traded heading into the Cash open, now still only 7 ticks range and just over 7k traded lots post Open.
- The stronger Japanese 40yr Auction had not Impact on US Treasuries nor Bund.
- The Street is clearly on a wait and see mode regarding the forward outlook on Rates for the US, EU and the UK.
- The message so far from most ECB Speakers is that the Interest Rate doesn't need to be changed for now and remains Data dependent, Fed Powell reiterated its cautious approach on Labour lag vs potential inflationary Risks (all eyes on NFP next Friday).
- Bund Technical are totally unchanged, support is at 128.04, did print a 128.01 low this Week, and resistance falls down to Monday's high of 128.41 which has held for the past two sessions.
- A busier Day on the Data front, albeit no Tier 1 Data out of Europe, but for the US, Prelim Wholesales/Durable Goods, final readings GDP/core PCE QoQ, and US IJC are all due ahead of the Core PCE Friday.
- The ECB Publishes its Economic Bulletin.
- SUPPLY: UK £1.25bn 2034, £750mln 2038 (equates combined to 18.4k Gilt) should have limited impact, but given the low Volumes in Bonds, can't be ruled out and could weigh on Futures into the bidding deadline. US Sells $44bn of 7yr Notes.
- SYNDICATION: Latvia 10yr Benchmark.
- SPEAKERS: ECB Kazimir, Fed Miran, Goolsbee, Williams, Schmid, Bowman, Barr, Logan, Daly.
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GILT TECHS: (Z5) Southbound
- RES 4: 92.15 High Aug 11
- RES 3: 92.06 High Aug 14
- RES 2: 91.45 High Aug 15
- RES 1: 91.24 High Aug 18 and a key near-term resistance
- PRICE: 90.96 @ Close Aug 22
- SUP 1: 90.31 Low Aug 22
- SUP 2: 90.11 Low May 22 and a key support
- SUP 3: 90.0089.99/ Psychological round number / Low Apr 9 (cont)
- SUP 4: 89.68 Low Jan 15 (cont)
A bear cycle in Gilt futures remains in play and the contract is trading closer to its recent lows. Note that on the continuation chart, moving average studies are in a bear-mode position, highlighting a clear downtrend - for now. First support to watch is 90.31, the Aug 22 low. A break would resume the bear leg and open the 90.00 handle. Initial resistance is at 91.24, the Aug 18 high.
BTP TECHS: (U5) In A Range
- RES 4: 122.35 2.500 proj of the May 14 - 20 - 21 price swing
- RES 3: 122.00 Round number resistance
- RES 2: 121.73 High Jun 13 and the bull trigger
- RES 1: 121.13 High Aug 15
- PRICE: 120.11 @ Close Aug 25
- SUP 1: 119.59 Low Jul 25 and key short-term support
- SUP 2: 119.48 Low May 26
- SUP 3: 118.87 Low May 21
- SUP 4: 118.51 Low May 14 and key support
The primary trend condition in BTP futures is unchanged, it remains bullish. However, for now, the contract continues to trade inside a range and the Aug 15 sell-off signals scope for a move towards the lower end of the range. Key support to watch lies at 119.59, the Jul 25 low. A clear break of this level would highlight a range breakout and a bearish threat. Key resistance is unchanged at 121.73, the Jun 13 high.
EURJPY TECHS: Structure Remains Bullish
- RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
- RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 1: 173.02/97 High Aug 13 / High Jul 28 and the bull trigger
- PRICE: 171.96@ 06:59 BST Aug 26
- SUP 1: 170.51 50-day EMA
- SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
- SUP 3: 168.46 Low Jul 1
- SUP 4: 167.46 Low Jun 23
The trend structure in EURJPY remains bullish and the cross is trading closer to its recent highs. Key support to watch lies at the 50-day EMA at 170.51. A clear break of the average is required to highlight a stronger short-term bearish threat. Moving average studies are in a bull-mode position reinforcing the primary uptrend. Clearance of the Jul 28 high of 173.97, would confirm a continuation of the bull cycle.
