GBPUSD TECHS: Bears Remain In The Driver's Seat

• RES 4: 105.325 High Jun 14
• RES 3: 105.295 High Aug 8 and a key resistance
• RES 2: 105.255 High Aug 9
• RES 1: 105.230 High Aug 24
• PRICE: 104.995 @ 05:24 BST Aug 28
• SUP 1: 104.905/760 Low Aug 23 / 15 and the bear trigger
• SUP 2: 104.741 76.4% retracement of the Jul 6 - Aug 8 bull leg
• SUP 3: 104.620/104.570 Low Jul 11 / 6 and the bear trigger
• SUP 4: 104.470 2.00 projection of the Jun 1 - 8 - 12 price swing

Schatz futures rallied last Wednesday resulting in a move above both the 20- and 50-day EMAs. The break higher signals scope for a stronger short-term recovery and an extension would expose the next key resistance at 105.295, the Aug 8 high. Moving average studies continue to highlight a downtrend and this suggests recent gains are part of a correction. Support to watch lies at 104.905, the Aug 23 low. A break would be bearish.

CPB data showed global export volume growth remained weak in June in both developed and emerging nations, especially in Asia. Advanced economies’ export growth rose 0.2% m/m to be down 0.6% y/y an improvement from -1.6% and outpacing EM which fell 1% m/m to be down 2.6% y/y after -0.5% y/y. Annual export growth contracted across Asia, except Japan which returned to positive territory, but generally saw some improvement.

• Export volumes from Japan grew 1.1% y/y in June after falling 3.5%, whereas advanced Asia ex Japan fell 3.8% y/y but improved from May’s -6.4%.
• China’s exports fell 1.3% y/y after falling 5.1%, while emerging Asia ex China saw shipments worsen to -8.4% y/y from +0.2% in May.
• The euro area was another weak spot in June with volumes falling 1.7% y/y after -1.8%. The UK on the other hand saw growth of 4.9% y/y. The US continued its run of positive outcomes since April 2022 with exports growing 2.9% y/y in June.

Source: MNI - Market News/Refinitiv/CPB

ACGBs (YM -3.0 & XM flat) are dealing at or near session lows. Retail sales data for July printed stronger than expected, although additional spending at catering and takeaway food outlets linked to the 2023 FIFA Women’s World Cup and school holidays boosted the overall result.

• The cash ACGB curve has bear-flattened, with yields flat to 2bp higher. The AU-US 10-year yield differential is 1bp higher at -7bp, after dealing at -10bp earlier in the local session.
• Swap rates are higher, with pricing flat to 2bp higher. EFPs are little changed, with the curve flatter.
• The bills strip has bear-steepened, with pricing -1 to -5.
• RBA-dated OIS is 2-8bp firmer for meetings beyond November, with Sep’24 leading.
• S&P Global Ratings reported that home loan arrears remained very low in Q2 rising to 0.97% for prime mortgages from 0.95% in Q1 and falling to 3.47% for non-prime from 3.7% due to the number of loans increasing. However, Roy Morgan released data showing the number of people at risk of mortgage stress rising 642k on a year ago to a record 1.5mn in the 3 months to July. (The Australian)
• Tomorrow the local calendar sees a speech from RBA Governor-Elect Bullock, titled “Climate Change and Central Banks”. On Wednesday, the CPI Monthly for July is on tap.