JGBS: Cheaper After Better Than Expected

• RES 4: 1.1949 2.0% 10-dma envelope
• RES 3: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 2: 1.1851 High Sep 10 2021 
• RES 1: 1.1750/1829 High Jul 10 / 01 and the bull trigger 
• PRICE: 1.1618 @ 06:07 BST Jul 16
• SUP 1: 1.1593 Low Jul 15
• SUP 2: 1.1575 Low Jul 24
• SUP 3: 1.1505-day EMA 
• SUP 4: 1.1446 Low Jun 19 

A corrective cycle in EURUSD remains in play and the pair traded lower Tuesday. Support at the 20-day EMA, at 1.1655, has been cleared. This shifts the focus to the 50-day EMA, at 1.1505. A clear break of the average is required to highlight a stronger reversal. For now, the move down appears corrective and trend signals continue to highlight a dominant uptrend. A resumption of gains would open 1.1829, the Jul 1 high and a bull trigger. 

ACGBs (YM -3.0 & XM -3.0) are cheaper with narrow ranges.

• Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session after yesterday's post-CPI sell-off.
• Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at -7bps. At -7bps the differential is positioned near the middle of the +/- 30bps range that has held since November 2022.
• The bills strip cheaper with pricing -3 to -4 beyond the first contract (-1).
• RBA-dated OIS pricing is firmer across meetings today and remains 17–21bps above levels seen prior to the 8 July RBA decision. A 25bp rate cut in August is given an 88% probability, with a cumulative 54bps of easing priced by year-end.
• Tomorrow, the local calendar will see June Employment and Consumer Inflation Expectation data.
• (Bloomberg Economics) -- Australia’s labour market report for June is likely to show a lift in jobs and a slight increase in the unemployment rate. We expect a 20k increase in jobs, after a weaker-than-expected 2.5k decline in May.
• The AOFM plans to sell A$1100mn of the 1.00% 21 November 2031 bond on Friday.

• RES 4: 131.95 High Jun 13 and the bull trigger
• RES 3: 131.33 High Jun 20  
• RES 2: 130.76 High Jul 4
• RES 1: 130.01/130.28 20- and 50-day EMA values
• PRICE: 129.48 @ 05:44 BST Jul 16
• SUP 1: 129.08 Low Jul 14 
• SUP 2: 128.97 Low May 14 and a reversal trigger
• SUP 3: 128.90 Low Apr 10 
• SUP 4: 128.40 Low Apr 9

Bund futures have recovered from their latest lows, however, a bear cycle remains intact. Recent weakness resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.28, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.