USDJPY TECHS: Corrective Recovery

• RES 4: 0.6895 High Jul 13 / 14 2023
• RES 3: 0.6871 High Dec 28 and a key resistance
• RES 2: 0.6839 High Jan 02
• RES 1: 0.6799 High Jul 11
• PRICE: 0.6774 @ 06:53 BST Jul 15
• SUP 1: 0.6703 20-day EMA
• SUP 2: 0.6657 50-day EMA
• SUP 3: 0.6576 Low Jun 10 and a key support
• SUP 4: 0.6558 Low May 8

AUDUSD bullish conditions remain intact and the pair is holding on to its recent gains. The move higher last week marks an extension of the recent breach of resistance at 0.6714, the May 16 high. The clearance of 0.6714, confirmed a resumption of the bull leg that started Apr 19. Sights are on 0.6839 next, the Jan 2 high. Key short-term support has been defined at 0.6576, the Jun 10 low. Initial firm support is at 0.6703, the 20-day EMA.

• Spain will look to hold a Bono/Olbi auction on Thursday. On offer will be the 1.25% Oct-30 Obli (ISIN: ES0000012G34), the on-the-run 10-year 3.45% Oct-34 Obli (ISIN: ES0000012N35) and the 0.85% Jul-37 Obli (ISIN: ES0000012I24). The auction size will be confirmed this afternoon but we think we will probably see a return to E4.5-5.5bln auction target ranges (after the previous E5-6bln range earlier this month when the new 7-year Obli was launched).
• France on Thursday 18 July will then look to hold an MT OAT auction with E9.5-11.5bln on offer – larger than seen last month in the midst of the election campaign, but smaller than the E12.0-12.5bln upper limits seen through the rest of 2024. On offer will be both on-the-run issues: the 3-year 2.50% Sep-27 OAT (ISIN: FR001400NBC6) and the 5-year 2.75% Feb-30 OAT (ISIN: FR001400PM68) alongside the off-the-run 1.00% May-27 OAT (ISIN: FR0013250560) and the 2.00% Nov-32 OAT (ISIN: FR001400BKZ3).
• France will then return later in the day to hold an IL OAT auction with E1.75-2.5bln on offer of the following: the 0.10% Mar-28 OATi (ISIN: FR0013238268), the 0.10% Mar-29 OATei (ISIN: FR0013410552), the 0.60% Jul-34 OATei (ISIN: FR001400JI88) and the 0.10% Jul-53 OATei (ISIN: FR0014008181).

NET NOMINAL FLOWS: This week sees two large redemptions totalling E29.2bln: E11.8bln from a formerly 5-year Austrian RAGB and E17.4bln of a formerly 10-year Dutch DSL. Coupon payments for the week are E3.5bln, of which E1.4bln are Dutch, E0.9bln are Italian, E0.7bln are Austrian, E0.2bln are Greek and E0.2bln are from the EFSF. This leaves estimated net flows for the week at negative E2.5bln versus positive E25.1bln last week.

For a recap of last week's issuance and more details on the next two weeks see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.

• RES 4: 119.55 1.764 proj of the Jun 11 - 21 - Jul 2 price swing
• RES 3: 119.00 Round number resistance
• RES 2: 118.58 High May 16 and a key resistance
• RES 1: 117.99 High Jul 11
• PRICE: 117.72 @ Close Jul 12
• SUP 1: 116.55 20-day EMA
• SUP 2: 116.07 Low Jul 8
• SUP 3: 114.72 Low Jul 2
• SUP 4: 114.35 Low Jun 11 and key support

BTP futures have recovered from 114.72, the Jul 2 low. Last week’s gains resulted in a break of resistance at 117.09, the Jun 21 high, and firmer resistance at 117.62, the Jun 5 high. This undermines a recent bearish theme and signals scope for a climb towards 118.58, the May 16 high and a key resistance. Initial support lies at 116.55, the 20-day EMA. A clear break of it would highlight a potential reversal.