EURGBP TECHS: Defies Bear Threat Backdrop
- RES 4: 0.8929 High Feb 17
- RES 3: 0.8925 High Mar 7 and a key resistance
- RES 2: 0.8898 Trendline drawn from the Feb 3 high
- RES 1: 0.8844 High Mar 15
- PRICE: 0.8809 @ 06:16 GMT Mar 22
- SUP 1: 0.8719 Low Mar 15 and key support
- SUP 2: 0.8712 61.8% retracement of the Dec 1 - Feb 3 bull leg
- SUP 3: 0.8691 Low Dec 19
- SUP 4: 0.8649 76.4% retracement of the Dec 1 - Feb 3 bull leg
EURGBP defied bearish short-term signals Tuesday and has recovered from its recent lows. The near-term outlook is bearish and attention is on support at 0.8722, the Jan 19 low. It has recently been pierced, a clear break would leave the 0.8700 handle exposed and signal scope for a continuation lower. Initial firm resistance to watch is at 0.8844, Mar 15 high. Clearance of this hurdle would ease bearish pressure and open 0.8898, a trendline resistance.
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BOBL TECHS: (H3) Short-Term Trend Needle Points South
- RES 4: 119.086 76.4% retracement of the Dec 7 - Jan 2 downleg
- RES 3: 118.880 High Jan 19 and the bull trigger
- RES 2: 117.725/118.670 50-day EMA / High Feb 2
- RES 1: 117.460 High Feb 9
- PRICE: 116.200 @ Close Feb 17
- SUP 1: 115.730 Low Feb 17
- SUP 2: 115.650 Low Jan 2
- SUP 3: 115.558 1.0% 10-dma envelope
- SUP 4: 115.253 3.0% Lower Bollinger Band
Bobl futures maintain a weaker tone following the reversal lower from 118.670, the Feb 2 high. Key short-term support at 117.020, the Jan 30 low, has opened further losses for the contract and on Tuesday took out 116.405, a Fibonacci retracement. Vol-band based support at 115.558 is next up, ahead of the early January lows. On the upside, the resistance to watch is at 117.725, the 50-day EMA. A break above this average would ease bearish pressure.
AUSSIE BONDS: Market Coils With Cash U.S. Tsys Closed
With nothing on the local data docket, Aussie bonds gave up early gains and tracked U.S. Tsy futures lower to close with YM -2.0 and XM +2.0. Cash ACGB yields close 4-5bp higher than morning lows, with the 3/10 cash curve 4bp flattener on the day.
- Swaps rates also reversed morning strength to close -2bp to +2bp, with the 10-year outperforming.
- Except for June bills which closed +1.0, the bill strip was 4-6bp lower today led by the reds.
- March meeting RBA-dated OIS holds its morning level at an 88% chance of a 25bp hike. Terminal rate expectations however move 5bp higher to be back at the top of the recent 4.10 to 4.22% trading range.
- On the news front, Treasurer Chalmers, in an interview on Sky News Australia, appeared keen to reiterate the message that the ongoing review of the RBA is to make sure "that they are accountable for that decision as an independent organization.”
- Looking ahead, the RBA Meeting Minutes are released tomorrow, but the focus remains on Wednesday’s Q4 WPI data.
US TSYS: Futures Cheaper In Asia, Cash Closed
TYH3 deals at 111-28, -0-04, a touch above the base of its 0-06+ range on volume of ~45K.
- Cash tsys are closed on Monday due to observance of the Presidents Day holiday.
- Tsys saw modest pressure in early trade, with local participants looking to lean against Friday's bid. However heightened geopolitical tensions (centred on Sino-U.S. relations and the latest round of North Korean missile launches) likely limited the follow through.
- Pressure then extended a little as Asia-Pac participants perhaps used the opportunity to set fresh shorts/exit longs after Friday's richening, with continued regional focus on the recent repricing of market expectations re: Fed tightening.
- Little in the way of meaningful macro headline flow crossed in the latter half of the session.
- The broader macro docket is very thin on Monday, with wider liquidity set to be hampered by the U.S. holiday.
