TURKEY: CBRT Cut One-Week Repo Rate 250bps to 42.50%
"TURKEY CUTS ONE-WEEK REPO RATE BY 250BPS TO 42.5%; EST. 42.50%" - BBG
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OUTLOOK: USDJPY Bear Threat Remains Present
- In FX, EURUSD recovered from Monday’s intraday low, however, for now, gains are considered corrective. Yesterday’s fresh cycle low, highlights a resumption of the downtrend. Moving average studies are in a bear-mode position and attention is on 1.0138, the 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing. Clearance of this level would open 1.0031, the 2.00 projection. Initial resistance is 1.0350, the Jan 31 low and Monday’s high.
- Despite a recovery from Monday’s low, the latest pullback in GBPUSD highlights a bearish threat. The move down signals the end of the Jan 13 - 27 correction and note too that resistance at 1.2504, the 50-day EMA, remains intact. Furthermore, MA studies are in a bear-mode position highlighting a dominant downtrend. A continuation lower would open 1.2100, the Jan 13 low and bear trigger. A clear break of the 50-day EMA would alter the picture.
- USDJPY is in consolidation mode. The primary trend condition is bullish, however, the Jan 27 move down highlights a stronger bear threat. The pair has breached the 50-day EMA and a trendline drawn from the Sep 16 ‘24 low. A resumption of the bear leg would open 152.55, 61.8% of the Dec 3 - Jan 10 bull leg. Initial firm resistance is at 156.75, the Jan 23 high. Clearance of this hurdle would be a bullish development.
US TSY FUTURES: Cover Slightly More Prominent On Monday
Long cover (TU), short cover (TY & UXY) and long setting (US & WN) were seen during Monday’s twist flattening of the curve, as tariff headlines drove intraday swings and curve flattening.
- Cover of existing positions outweighed the setting of fresh positions in curve-wide DV01 equivalent terms.
| 03-Feb-25 | 31-Jan-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,104,127 | 4,185,411 | -81,284 | -3,025,390 |
FV | 6,394,999 | 6,382,175 | +12,824 | +530,272 |
TY | 4,860,584 | 4,877,945 | -17,361 | -1,108,673 |
UXY | 2,314,292 | 2,319,757 | -5,465 | -476,165 |
US | 1,966,377 | 1,957,509 | +8,868 | +1,106,726 |
WN | 1,796,133 | 1,791,969 | +4,164 | +781,250 |
|
| Total | -78,254 | -2,191,981 |
EUROPEAN FISCAL: France 2024 Budget Deficit Less Than Forecast
The French general government budget deficit ended 2024 at E156.3bn, smaller than the E163.2bn the Finance Ministry forecast in its draft finance bill back in November. It also compares favorably to the E173.3bn in 2023.
- We calculate this as being worth 5.4% GDP for 2024. Whilst there can be differences compared to what the Ministry of Finance formally forecasts, it's an improvement from the 6.1% forecast for 2024 in its November update but is still firmly above the initial target of 4.4% (around a budget deficit of E146.9bln).
- The data come after PM Bayrou forcefully pushed the 2025 budget through parliament without a vote on Monday, targeting a deficit of 5.4% GDP for 2025.
- The French Ministry of Budget and Public Accounts has published an updated timeline of key milestones for the 2025 budget:
- 3 February: Discussions began on the report of the joint committee (CMP) of the 2025 Finance Bill at the National Assembly.
- 6 February: Discussion on the 2025 Finance Bill in the Senate will take place.
- 17 February: New reading of the PLFSS 2025 (social security financing bill) expected in the Senate.
- In terms of the latest monthly data, the narrowing in the ytd deficit from E172.5bn as of November to E156.3bn looks in keeping with the typical seasonal pattern.
- We will follow up with an breakdown of the components driving the narrowing in the budget deficit in 2024.
