EQUITIES: Big Focus on the European Cash Open
As noted on the Bund Cash Open, Immediate focus should be on Equities in early trade and now the cash open.
We should see some opening gaps higher despite the likes of the Estoxx future (VGZ5) fading a few points off its high.
- Calls: Estox 50: +0.92%, Dax: +0.77%, CAC: +0.72%, FTSE +0.55%, SMI +0.49%,
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USD: Notable moves in the Yen
- The Dollar start the session on the front foot, this has not been seen in nearly a Week, the standout early mover is the Yen.
- USDJPY already trades in a 100 pips range, and while some overnight Desks have put it on BoJ Himino not giving any clue on the Timing in Rate moves, the main story and concerns is more political.
- Japan's ruling Party will disclose Today why it lost seats at the July Upper House Election, and if a review is finalized, lawmakers will be expected to submit request on September the 8th for a leadership Election.
- There are no set time or Date for a LDP meeting in Sept as of Yet.
- The Yen is extending broader lows against the USD, EUR, GBP, AUD as Europe comes in.
- Next immediate resistance in USDJPY comes at 148.18.
- We highlighted the USDSEK chart Yesterday, and the Scandies outperformed, as local FX Desks noted, Local demand combined with the US out, taking away some Dollar demand, saw the Scandies outperforming.
- USDSEK found support right on the noted 9.3792 level, the June low and lowest level since April 2022.
- The SEK is flat in early trade, but hovers near that June low in USDSEK.
STIR: Euribor Implied Terminal Rate At Highest Since Pre Liberation Day
The Euribor-implied terminal rate, currently indicated by the M6 contract, is up 2bps to 1.91%, the highest level since before the April 2 Liberation Day tariff announcement. The combination of relatively resilient economic data, a lack of downside inflation surprises and cautious ECB-speak has seen markets gradually warm to the idea of a 2% terminal rate, even as analysts still lean in favour of one more 25bp cut on net.
- The light hawkish reaction in Euribor futures to ECB Executive Board member Schnabel’s interview with Reuters has stuck, with ERH6 currently at fresh multi-month lows at 98.075.
- ECB-dated OIS price 7bps of easing through year-end, with 17.5bps of easing priced through June 2026 (up to 1.5bps more hawkish vs yesterday's close).
- Today’s regional calendar is headlined by the Eurozone-wide August HICP reading, but country-level data released over the past few days does not suggest a major surprise is imminent.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Sep-25 | 1.924 | -0.1 |
| Oct-25 | 1.909 | -1.6 |
| Dec-25 | 1.854 | -7.2 |
| Feb-26 | 1.833 | -9.2 |
| Mar-26 | 1.792 | -13.3 |
| Apr-26 | 1.781 | -14.4 |
| Jun-26 | 1.752 | -17.4 |
| Jul-26 | 1.767 | -15.8 |
| Source: MNI/Bloomberg Finance L.P. | ||
USDCAD TECHS: Has Breached The 50-Day EMA
- RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 3: 1.3925 High Aug 22 and the bull trigger
- RES 2: 1.3868 High Aug 26
- RES 1: 1.3790 20-day EMA
- PRICE: 1.3750 @ 07:35 BST Sep 2
- SUP 1: 1.3722 Low Aug 7
- SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 4: 1.3637 Low Jul 25
A bull cycle in USDCAD that started mid-June remains in play. However, the latest corrective pullback has resulted in a breach of support at the 50-day EMA, at 1.3775. A clear break of this handle signals scope for a deeper retracement and exposes 1.3722, the Aug 7 low. Moving average studies have recently crossed and are in a bull-mode position, highlighting an uptrend. The bull trigger has been defined at 1.3925, the Aug 22 high.
