USDCAD TECHS: Corrective Bounce Extends

• Treasuries look to finish mixed Tuesday, off early session lows, curves twisting flatter as short end rates outperform. Relatively quiet session with limited data (Philly Fed non-mfg activity & Redbook retail sales index) and multiple Fed speakers on the day.
• Depending on how tariffs and their impacts play out, StL Fed Musalem appeared to suggest he could support either an easing bias; a "balanced" approach, or holding rates indefinitely. In the meantime, policy "is currently well positioned."
• Stocks weaker, but off late lows, short covering as markets await vote on tax bill. Late comment from Atlanta Fed Bostic: that passage of Pres Trump's "big, beautiful tax bill" could add to overall uncertainty.
• Relatively heavy session volumes tied to surge in Jun/Sep Tsy futures rolling, Sep takes lead quarterly on May 30.
• Currently, Jun'25 10Y  futures trade +2 at 110-06.5 (109-28.5 low/110-14.5 high), well withing technical ranges: resistance above at 110-23.5 (20-day EMA); support at 109-18.5 (Low May 15).
• Cross asset roundup: Greenback gradually extended late lows (BBDXY -2.51 at 1222.47); Gold surged to 3,294.13 (+64.57); Crude mildly weaker (WTI -.13 at 62.56.

• RES 4: 0.5682 High Nov 12 ‘24  
• RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 2: 0.6528 High Nov 29 ‘24
• RES 1: 0.6515 High May 7 
• PRICE: 0.6399 @ 16:40 BST May 20
• SUP 1: 0.6360 50-day EMA   
• SUP 2: 0.6275 Low Apr 14    
• SUP 3: 0.6181 Low Apr 11
• SUP 4: 0.6116 Low Apr 10  

AUDUSD is in consolidation mode. The trend condition remains bullish and the May 13 rally signals the end of the recent corrective pullback. Attention is on key resistance at 0.6515, the May 7 high. Note that moving average studies are in a bull-mode position, highlighting an uptrend. A resumption of the trend would open 0.6550, a Fibonacci retracement. Key support to monitor is 0.6360, the 50-day EMA. 

Option desks reported better SOFR put trade on net Tuesday in addition to some sporadic call buys on decent volume, Treasury options saw decent vol structures earlier. Underlying futures mixed, curves steeper with short end outperforming. Projected rate cut pricing largely steady vs. morning levels (*) as follows: Jun'25 steady at -1.3bp, Jul'25 steady at -7.5bp, Sep'25 at -21.5bp (-21.8bp), Oct'25 steady at -35.5bp, Dec'25 at -52.9bp (-53bp).

• SOFR Options:
  • +5,000 SFRZ5 94.87/95.37 2x1 put spds 0.0 ref 96.195
  • +8,000 SFRM5 95.75/96.00 call spds, 0.75 vs. 96.675/0.16%
  • +10,000 SFRH6 95.75/96.25 3x1 put spds 0.5 vs. 96.39/0.14%
  • +50,000 SFRM5 97.25 calls, cab
  • -2,500 0QH6/SFRH7 95.00 put spds, 10.5
  • +8,000 SFRM5 95.68/95.81/95.93 call flys, 0.5 ref 95.6825
  • 8,000 SFRZ5 96.50 call vs. 2QZ5 96.75 calls, 5-5.25 flattener (+2QZ5)
  • +10,000 SFRU5 95.75/95.81 put spds, 3.75 vs. 95.90/0.10%
  • -5,000 0QU5 96.87/97.00/97.12 call trees, 7.0 vs. 96.00/0.19%
  • -2,500 3QM5 95.87/96.12 2x1 put spds, 1.5 ref 96.33
  • +4,000 SFRM5 95.68/95.75 put spds, 5.5 ref 95.6825
  • +5,000 SFRU5 95.87 vs. 0QU5 96.25 put spds, 1.25
  • 5,000 SFRN5 95.62 puts, 0.5
  • 4,000 SFRH6 94.75 puts, ref 96.42
  • Block, 5,000 SFRM5 95.62/95.75/95.87 put flys, ref 95.69
  • 3,600 SFRM5 95.68/95.75 put spds ref 95.6925 to -.69
• Treasury Options:
  • -7,800 TYN5 110 straddles 1-41 ref 110-03.5
  • -11,000 TYM5 110.25/111.5 put spds 1-05
  • +9,000 TYQ5 108/112.5 strangle, 59
  • Block, +17,000 TYQ5 113 call w/ 17,500 TYQ5 107.5 puts, 47 total vs. 110-05
  • 2,400 TYN5 114/114.5 call spds ref 110-14