PLN: CZK: 100-DMA Stands In Way Of Continued Recovery From Cyclical Lows
Oct-24 09:55
PLN/CZK trades -69 pips at 5.7456 after rejecting resistance from the 100-DMA (5.7572) yesterday. The rate has been moving away from cyclical lows this month, testing and then clearing the 50-DMA in the process. A break above the 100-DMA would suggest that bullish reversal is picking up steam. Bears look for a pullback toward cyclical lows below the 5.7 mark.
- The next key catalyst will be provided in the week starting on November 3, with the NBP and CNB set to announce their monetary policy decisions in quick succession. Czech central bankers are expected to keep interest rates stable in the near term, while Poles will weigh a hold against a 25bp rate cut.
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OUTLOOK: Price Signal Summary - Bull Cycle In EUROSTOXX50 Futures Intact
Sep-24 09:49
- In the equity space, a bull cycle in S&P E-Minis remains intact and the contract traded to a fresh cycle high on Monday. Price has recently breached the 6700.00 handle and this signals scope for an extension towards 6787.63, a 1.382 projection of the Aug 1 - 15 - 20 price swing. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Initial support to watch lies at 6625.74, the 20-day EMA.
- EUROSTOXX 50 futures are trading closer to their recent highs. The contract recently cleared resistance around the 20-day EMA - a bullish development - and the subsequent rally reinforces a bullish theme. The move signals potential for a climb towards 5525.00, the Aug 22 high and a bull trigger. On the downside, key support to monitor is 5302.00, the Sep 2 low. First support lies at 5417.44, the 20-day EMA.
FOREX: AUD Outperforming Following CPI, CBA Expect AUDUSD Move to 0.72
Sep-24 09:44
- Firmer-than-expected monthly CPI data in Australia is prompting some Aussie outperformance on Wednesday. Whilst the RBA will continue to place more weight on the quarterly reading, AUDUSD is currently up 0.2% and bucking the stronger dollar theme. The pair’s technical uptrend remains intact, and the latest post-Fed pullback is considered corrective - for now. A weekly close above the prior 0.6625 high would be a bullish development.
- Market participants have been more focussed on AUDNZD, which has extended its impressive rally to trade to a fresh cycle high of 1.1317. As noted, resistance remains scant on the chart until 1.1491, the 2022 high. It is also worth reflagging that the NZ government has appointed Riksbank First Deputy Governor Anna Breman to be the new RBNZ governor.
- CBA forecast AUD will lift against all the major currencies, except for NZD, over the next few quarters. They believe “a weaker USD and elevated risk appetite amid an improving global economic outlook will underpin the AUD cross rates.”
- For AUDUSD specifically, CBA expect spot to converge closer to their estimate of fair value of 0.72 in coming quarters. They then expect AUDUSD to decline in the second half of 2026 if they are right about the Chinese economy expanding below potential again next year.
EGBS: Monday's High Contains Upside In Bund Futures Again
Sep-24 09:39
- The light early bid in Bund futures faded as the bidding deadline for today’s 7-year Bund auction approached. With supply now in the rear view, Bunds are +10 ticks at 128.28. Monday’s high of 128.41 has contained upside once again, with today’s range just 21 ticks wide.
- Early upside in Bunds may have been driven by renewed concerns around the Russia-Ukraine conflict alongside a weaker-than-expected German September IFO print.
- German yields are up to 1bp lower across the curve, with a light bull flattening bias intact. The 7-year Bund results were much better than last month’s soft outing.
- 10-year EGB spreads to Bunds are up to 1.5bps wider, seemingly a result of the Russia/Ukraine concerns, with BTPs underperforming (spread to Bunds at ~81bps).
