SILVER TECHS: Corrective Cycle

Gilts a touch higher after Bunds & Tsys firm through early London trade.

• Ongoing weakness in crude oil helps provide support.
• Futures back towards yesterday’s high, topping out at 90.91.
• Initial support and resistance 90.60/91.11.
• Yields 1-2bp lower, curve flatter, last week’s lows in 2s10s and 5s30s remain untouched (closing lows are ~6bp away on both curves).
• UK flash PMI data is due today.
• It is also worth noting that the DMO will come to market with 30-Year gilts. Market participants will be watching the demand metrics closely after last week’s PSNB data revealed ongoing fiscal deterioration.
• On the fiscal front, the Resolution Foundation has suggested that Chancellor Reeves could raise ~GBP6bln by cutting employee national insurance contributions by 2ppt and raising the basic rate of income tax by the same amount. Note that this would only cover around 20% of the fiscal shortfall, but it would be a way of not increasing taxes on "working people" and might avoid some more painful taxes elsewhere that could hit growth harder or increase CPI.
• Elsewhere, BoE chief economist Pill will speak via a fireside chat on “Challenges of Monetary Policy in an Environment of High Fiscal and Geopolitical Uncertainty” (10:00 London).

• RES 4: 0.6793 1.500 proj of the Jun 23 - Jul 24 - Aug 21 price swing
• RES 3: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
• RES 2: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
• RES 1: 0.6660/6707 High Sep 18 / 17
• PRICE: 0.6586 @ 08:07 BST Sep 23
• SUP 1: 0.6575/6547 Low Sep 22 / 50-day EMA 
• SUP 2: 0.6527 61.8% retracement of the Aug 21 - Sep 17 bull leg  
• SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger 
• SUP 4: 0.6373 Low Jun 23

The AUDUSD uptrend remains intact and the latest pullback is considered corrective - for now. The recent rally plus the breach of 0.6625, the Jul 24 high and bull trigger, confirms a resumption of the uptrend. The climb opens the 0.6726 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Key support to watch is 0.6415, the Aug 21 / 22 low. Initial firm support to watch is 0.6547, the 50-day EMA. 

The Riksbank decision is due at 0830BST/0930CET, with consensus split between a 25bp cut to 1.75% and a hold at 2.00%. 

• MNI Preview here
• There are credible reasons to motivate either decision.
• We suspect the Board will be equally split (but don’t necessarily think that will be reflected in any formal dissents), with some members advocating for a form of insurance cut given a still-weak labour market and signs that the recent inflation uptick was temporary, and others preferring to wait for more data before determining if another cut is necessary.
• The September decision includes an updated MPR and rate path projection.