EURIBOR OPTIONS: Call spread buyer

• RES 4: 1.3805 High Mar 24
• RES 3: 1.3695 High Mar 28
• RES 2: 1.3668 High Apr 28 and key resistance
• RES 1: 1.3542/3640 High May 5 / 3
• PRICE: 1.3443 @ 15:46 BST May 5
• SUP 1: 1.3443 Low May 5
• SUP 2: 1.3442 61.8% retracement of the Apr 14 - 28 rally
• SUP 3: 1.3436 1.0% 10-dma envelope
• SUP 4: 1.3385 Low Apr 19

USDCAD traded lower still Friday and has resumed the bear leg that started Apr 28. Note too that price has breached both the 20- and 50-day EMAs and this suggests scope for a deeper retracement. Sights are on 1.3442, a Fibonacci retracement and 1.3436, the 1.0% 10-dma envelope. On the upside, key resistance has been defined at 1.3668, the Apr 28 high. A break of this level is required to reinstate a bullish theme.

Treasury futures remain weaker after the bell, drifting near the middle of a wide session range after stronger than expected April employment data took some of the hot air out of rate pause/cuts expectations.

• Treasury futures marked session lows after stronger than expected April jobs gain of +253k vs. +185k est: TYM3 hit 115-13.5 low, 10Y yield initially hit 3.4521% high before tapping 3.4635% around noon - is currently at 3.4351% +.0564.
• April's headline household survey stats included the labor force contracting by a modest 43k (of 166.7M), with the participation rate unchanged at 62.6% (including - as we noted earlier - a fresh post-2008 high for prime-age participation). A strong if slightly odd breakdown in the unemployment rate figure though, which was down 0.1pp to 3.4%.
• Treasury futures quickly recovered to near mid-range, trading sideways for the rest of the session. Risk appetite improved as stocks, lead by regional banks (PacWest rallied over 80% this morning!), rallied (SPX eminis +78.25 at 4154.0).
• Fed Funds implied rates are holding close to earlier highs post-payrolls with Bullard supporting them. Now showing zero cuts for the June FOMC (+3.5bp on the day), 10bp of cuts to 4.98% July (+7bp), 26bp of cuts to 4.82% Sep (+11bp) and building to a cumulative 75bp of cuts to 4.33% Dec (+15bp), with the latter from 85bps pre-payrolls.
• Slow start to next week, focus is on CPI read for April on Wednesday, while President Biden and House speaker McCarthy are expected to discuss the debt limit on Tuesday.

• RES 4: 0.6861 50.0% retracement of the Feb 2 - Mar 10 bear leg
• RES 3: 0.6824 High Feb 24
• RES 2: 0.6772/0.6806 High Apr 20 / Apr 14 and key resistance
• RES 1: 0.6744 High May 4
• PRICE: 0.6738 @ 15:57 BST May 5
• SUP 1: 0.6640/6565 Low May 4 /
• SUP 2: 0.6565 Low Mar 10 and the bear trigger
• SUP 3: 0.6547 61.8% of the Oct - Feb bull cycle
• SUP 4: 0.6500 Round number support

AUDUSD traded higher Friday and has cleared resistance at the 50-day EMA. A continuation would signal scope for a test of 0.6772, the Apr 20 high and a breach of this level would expose key resistance at 0.6806, Apr 14 high. On the downside, key support to watch lies at 0.6565, Mar 10 low. Clearance of this level would be bearish and would resume the downtrend that started Feb 2.