EUROZONE ISSUANCE: EGB Supply
Italy still looks to return to the market this week while the EU, Netherlands and Italy have already issued this week. We pencil in gross nominal issuance of E23.3bln (including issuance via exchanges), up from E13.0bln last week.
- On Friday, Italy will look to conclude H1 issuance with a 5/10/11-year BTP auction. The 5-year on-the-run 3.80% Aug-28 BTP (ISIN: IT0005548315) will be reopened for E2.5-3.0bln alongside the 10-year on-the-run 4.35% Nov-33 BTP (ISIN: IT0005544082) for E2.75-3.25bln and E1.00-1.25bln of the 5.00% Aug-34 BTP (ISIN: IT0003535157) which originally had a 30-year maturity. There will be no CCTeu sold at this auction due to the launch of the Oct-31 CCTeu at the syndicated exchange.
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USDJPY TECHS: Approaching Channel Resistance
- RES 4: 142.25 High Nov 21 2022
- RES 3: 141.61 High Nov 23 2022
- RES 2: 141.24 2.0% 10-dma envelope
- RES 1: 140.81/92 Bull channel top from the Jan 16 low / High May 29
- PRICE: 140.63 @ 06:48 BST May 30
- SUP 1: 139.50 Low May 26
- SUP 2: 138.23 Low May 24
- SUP 3: 137.58 20-day EMA
- SUP 4: 137.43 Low May 19
USDJPY bullish conditions remain intact and the pair is holding on to its recent gains. Price has arrived at the top of the bull channel drawn from the Jan 16 low which intersects at 140.81. This represents a key resistance and a clear break of it would reinforce bullish conditions and open 141.61, the Nov 23 2022 high. For bears, a reversal lower would instead highlight a potential short-term top. Initial key support to watch is 137.58, the 20-day EMA.
EUROZONE T-BILL ISSUANCE: W/C May 29, 2023
Belgium, Germany, France and Greece will look to sell bills this week. We look for issuance at first round operations of E14.5bln, down from last week's E18.1bln.
- Belgium will kick off bill issuance for the week this morning, with E0.8-1.2bln of the 3.5-month Sep 14, 2023 TC on offer.
- Germany will also look to sell 5/11-month bubills this morning to reopen E2bln of the 5-month Oct 18, 2023 bubill alongside E4bln of the 11-month Apr 17, 2024 bubill.
- This afternoon, France will come to the market with up to E6.9bln of BTFs on offer: E2.3-2.7bln of the new 13-week Aug 30, 2023 BTF, E0-0.4bln of the 14-week Sep 6, 2023 BTF, E1.6-2.0bln of the 20-week Oct 18, 2023 BTF and E1.4-1.8bln of the 50-week May 15, 2024 BTF.
- Tomorrow, Greece will conclude eurozone bill issuance for the week, with E625mln of the new 26-week Dec 1, 2023 GTB on offer.
BTP TECHS: (M3) Bounce Considered Corrective
- RES 4: 116.97 High Apr 6
- RES 3: 116.17 76.4% retracement of the Mar 24 - Apr 24 downleg
- RES 2: 115.48/89 High May 16 / 11
- RES 1: 114.65 High May 22
- PRICE: 114.17 @ Close May 29
- SUP 1: 112.60 Low May 26
- SUP 2: 111.88 76.4% retracement of the Mar 2 - 24 rally
- SUP 3: 111.05 Low Mar 8
- SUP 4: 110.79 Low Mar 7
A bearish threat in BTP futures remains present, despite Monday’s strong bounce. The contract has recently traded through both the 20- and 50-day EMAs. Key support at 112.93, the Apr 24 low, has also been breached and a continuation lower would open 111.88, a Fibonacci retracement. A break of this level would strengthen bearish conditions. Key short-term resistance is at 114.65, the May 22 high.
