US TSYS: A Touch Richer
Tsy participants remain non-committal in Asia-Pac dealing, owing to a lack of headline catalysts and ahead of the previously outlined immediate event risk (German CPI data & a slew of ECB & Fed speak). TYZ2 holds within a narrow 0-05 range as a result, while cash Tsys run little changed to ~2bp richer across the curve, now bull flattening after some early bull steepening, with little impetus evident since the cash re-open.
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USDCAD TECHS: Heading South
- RES 4: 1.3224 High Jul 14
- RES 3: 1.3188 3.0% Upper Bollinger Band
- RES 2: 1.3038 High Jul 18
- RES 1: 1.2904/47 20-day EMA / High Jul 25
- PRICE: 1.2805 @ 16:42 BST Jul 29
- SUP 1: 1.2788 61.8% retracement of the Jun 8 - Jul 14 upleg
- SUP 2: 1.2763 Low Jun 13
- SUP 3: 1.2685 76.4% retracement of the Jun 8 - Jul 14 upleg
- SUP 4: 1.2633 2.0% 10-dma envelope
USDCAD maintains a bearish theme and the pair is trading at its recent lows. 1.2819, the Jun 28 low, has been pierced. A clear break of this support would strengthen bearish conditions and extend the move below both the 20- and 50-day EMA values. This would open 1.2763, the Jun 13 low. On the upside, initial resistance to watch is currently at 1.2947, Jul 25 high. A break would ease the current bearish threat.
US TSYS: Rates Off Highs Into Month End
Tsys futures remain mixed by the bell, curves flatter with short end underperforming: 2s10s -4.966 at 24.198, 5s10s -2.275 at -4.803.
- Weaker data in-line w/ more moderate rate hikes later in the year: Little initial reaction after slight gain in June reading of Personal Income is +0.6% MoM vs. +0.5 est, PCE Deflator is +1.0% MoM vs. +0.9% est, and ECI +1.3% vs. +1.2% est. Rates and stocks moved higher after the Chicago Business BarometerTM, produced with MNI, slid further in July, extending June's decline. The indicator fell 3.9-points to 52.1, the lowest level since August 2020.
- Exogenous factors: Tsys had come under pressure in early London hours after higher than expected French, Italian and Spanish GDP economic data triggered selling in EGBs w/ brief pause after weaker than expected German GDP.
- Meanwhile, Fed speakers out of media blackout: Atlanta Fed Bostic broke the seal earlier, reiterating Chair Powell's talking point: we are not in a recession, but inflation needs to be addressed w/ "more work needs to be done on bringing demand and supply into balance".
- Next Monday data: S&P Global Mfg data (52.4 est), ISMs (mfg 52.0 est; prices paid 73.5 est), JOLTS job openings (10.994M).
- Current cross assets: spot Gold +5.35 at 1761.19, Crude firmer but off early highs WTI +2.18 at 98.60, stocks on high ESU2 +64.50 at 4138.00 -- highest level sine June 9..
- Currently, 2-Yr yield is up 4.1bps at 2.9027%, 5-Yr is up 1bps at 2.7079%, 10-Yr is down 1.1bps at 2.665%, and 30-Yr is down 1.7bps at 3.0057%.
AUDUSD TECHS: Holding On To Its Gains
- RES 4: 0.7202 High Jun 9
- RES 3: 0.7141 76.4% retracement of the Jun 3 - Jul 14 downleg
- RES 2: 0.7069 High Jun 16
- RES 1: 0.7053 61.8% retracement of the Jun 3 - Jul 14 downleg
- PRICE: 0.6971 @ 16:39 BST Jul 29
- SUP 1: 0.6903/0.6859 20-day EMA / Low Jul 21
- SUP 2: 0.6786/6682 Low Jul 18 / 14 and the bear trigger
- SUP 3: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 4: 0.6588 Low May 28 2020
AUDUSD is holding on to its recent gains and the short-term outlook remains bullish. A continuation higher would open the Jun 16 high at 0.7069, and potentially 0.7141 further out, a Fibonacci retracement. A strong reversal lower would instead refocus attention on the 0.6682 bear trigger, Jul 14 low, where a break would confirm a resumption of the broader downtrend. Initial support to watch is at 0.6903, the 20-day EMA.
