USDCAD TECHS: Corrective Cycle
- RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 3: 1.3920 High May 21
- RES 2: 1.3862 High May 29
- RES 1: 1.3845 High Jul 30
- PRICE: 1.3820 @ 07:55 BST Jul 31
- SUP 1: 1.3701/3557 20-day EMA / Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
A short-term correction in USDCAD remains in play. Note that price has traded through the 50-day EMA at 1.3734 and this has been followed by a break of resistance at 1.3798, the Jun 23 high. Clearance of 1.3798 represents an important short-term bullish development, signalling scope for a stronger recovery. Sights are on 1.3862 next, the May 29 high. On the downside, initial firm support to watch lies at 1.3701, the 20-day EMA.
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GILTS: Opening calls
Gilt Opening calls, 93.28/93.34 range.
EQUITIES: EU Cash Opening Calls
Set for a steadier open:
- Estox 50: +0.24%.
- Dax: +0.16%.
- CAC: +0.17%.
- FTSE: +0.19%.
- SMI: +0.18%.
STIR: Around 55bp Of BoE Cuts Priced Through Dec, Bailey Eyed
Modest dovish adjustments in GBP STIRs vs. settlement levels, with Bunds & Tsys firming overnight.
- SONIA futures last flat to +2.5.
- SFIZ5 & Z6 trade through their June highs, with bulls now looking to the nearby May 9 & May 8 highs in the respective contracts.
- BoE-dated OIS is little changed to 0.5bp more dovish across ’25 meetings, showing 20.5bp of easing for August, 28bp through September, 46bp through November and 56bp through year-end.
- Dovish moves have failed to break the 55-56bp of cuts through December area in recent weeks.
- We still point to 2x 25bp cuts from the BoE through year-end (August & November) at this stage, although risks are skewed dovishly.
- Final manufacturing PMI data is due this morning.
- Elsewhere, BoE Governor Bailey will appear on a panel alongside Fed’s Powell, ECB’s Lagarde, BoJ’s Ueda and BoK’s Rhee (from 14:30 London). We heard from Bailey twice last week, and he didn’t really say anything to guide future policy in either appearance. We expect more of the same.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 4.011 | -20.6 |
Sep-25 | 3.935 | -28.2 |
Nov-25 | 3.759 | -45.9 |
Dec-25 | 3.659 | -55.8 |
Feb-26 | 3.519 | -69.8 |
Mar-26 | 3.477 | -74.0 |
