RENEWABLES: CWE Morning Wind Forecast

• RES 4: 1.1851 High Sep 10 2021
• RES 3: 1.1829 High Jul 01 and the bull trigger 
• RES 2: 1.1789 High Jul 24 
• RES 1: 1.1607 20-day EMA
• PRICE: 1.1580 @ 07:44 BST Aug 6
• SUP 1: 1.1401 Low Jul 30 and a bear trigger
• SUP 2: 1.1373 Low Jun 10
• SUP 3: 1.1313 Low May 30
• SUP 4: 1.1184 38.2% retracement of the Feb 3 - Jul 1 bull cycle  

Prices are consolidating at higher levels, and despite Friday's rally and a late recovery into the Tuesday close, EURUSD maintains a bearish tone. The recent breach of key support at the 50-day EMA, at 1.1548, highlights a stronger reversal and the start of a correction. This opens 1.1373 next, the Jun 10 low. Firm resistance is seen at 1.1607, the 20-day EMA, where a break is required to signal a reversal. This week’s price action highlights a key short-term support and bear trigger at 1.1401, Jul 30 low. A break would resume the downtrend.   

Modest hawkish adjustments in GBP STIRs with both TY and Bund futures trading below levels that prevailed at yesterday’s SONIA settlement window.

• SONIA futures flat to -2.5.
• BoE-dated OIS little changed to 0.5bp less dovish.
• A little over 23bp of easing priced for Thursday’s decision, ~26bp of cuts priced through September, 41bp through November and 48bp through year-end.
• Click for our full BoE preview.
• Comments from the NIESR thinktank noted overnight. NIESR wrote “the Government is not on track to meet its ‘stability rule’, with our forecast suggesting a current deficit of £41.2 billion in the fiscal year 2029-30. Substantial adjustments in the Autumn Budget will be needed if the Chancellor is to remain compliant with her fiscal rules”. This underscores already elevated fiscal worry in the UK.
• On the monetary policy front, NIESR is very much in line with market pricing, noting that they “anticipate two more 25 basis‑point rate cuts in 2025, followed by a further cut in 2026. Although an uncertain economic outlook may limit the Bank of England’s room for manoeuvre, we expect the MPC to continue its gradual easing, even with short-term upward pressure on prices this year”.
• Little of note on the UK macro calendar today, which will leave focus on cross-market matters (Fed leadership, global trade etc). for much of the day.

• The Dollar is Mostly flat against most G10, but the NZD and the Aussie outperforms, the Overnight New Zealand employment was better than expected, to put the Kiwi as the best early performer, off its best level going into the European session, but still up 0.30% at Typing.
• Overnight desks have also suggested that the Risk On Tone has been supportive of the NZD and the AUD, but at least for now, both the Emini and Estoxx and wider Indices are some way short of last Thursday's high, the day when Equities across the Globe started to plummet.
• NZDUSD didn't quite managed to break above Monday's high at 0.5930, only printed a 0.5927 high.
  Better resistance is seen around 0.5943 in te cross.
• The Normally very Volatile Yen has seen a contained 44 pips range, on the back of a tight 5 big ticks range in the US Tnotes.