EUROZONE ISSUANCE: EGB Supply
Germany and Italy are both still due to issue this week while the EU, Germany and Portugal have already come to the market. We pencil in gross nominal issuance of E18.7bln, down from E27.9bln last week (excluding retail operations).
- Germany will return to the market on Wednesday to hold a 30-year Bund auction. E1.0bln of the 1.25% Aug-48 Bund (ISIN: DE0001102432) will be on offer alongside E1.5bln of the 0% Aug-52 Bund (ISIN: DE0001102572).
- Italy will come to the market on Thursday to sell up to E8.0bln across on-the-run 3/7/20-year BTPs and the 12-year BTP Green: E2.25-2.75bln of the 3-year 3.85% Sep-26 BTP (ISIN: IT0005556011), E2.25-2.75bln of the 7-year 4.00% Nov-30 BTP (ISIN: IT0005561888), E1.0-1.5bln of the 4.00% Apr-35 BTP Green (ISIN: IT0005508590) and E0.75-1.00bln of the 20-year 4.45% Sep-43 BTP (ISIN: IT0005530032).
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MNI: NORWAY AUG CPI -0.8% M/M, +4.8% Y/Y
- MNI: NORWAY AUG CPI -0.8% M/M, +4.8% Y/Y
STIR: Goldman Recommend Paying RBA Dec OIS
Late on Friday Goldman Sachs noted that “as widely anticipated, the Reserve Bank of Australia left its official cash rate unchanged at 4.1% at its September meeting.”
- “The Bank acknowledged evidence of recent passthrough of policy tightening to growth and labour markets, but reiterated caution on the inflation outlook and maintained a tightening bias; the hold was framed as buying time to assess the impact of cumulative hikes to date.”
- “Our economists continue to expect a hike in November to 4.35%. The combination of a potential hawkish pivot in RBA’s reaction function, services inflation persistence at “still too high” levels, elevated labor costs and limited impact of fixed rate mortgages' roll-off support the argument for a final hike.”
- “Therefore, notwithstanding a reference to weakness in the Chinese economy, at only 1-in-5 cumulative chance of an additional hike over the next three meetings, we believe markets are underpricing the risk of additional tightening this year, and recommend paying December RBA OIS.”
EURJPY TECHS: Testing Support AT The 50-Day EMA
- RES 4: 160.66 2.382 proj of the May 11 - 29 - 31 price swing
- RES 3: 160.00 Psychological handle
- RES 2: 159.92 2.236 proj of the May 11 - 29 - 31 price swing
- RES 1: 158.52/159.76 High Sep 7 / High Aug 30 and the bull trigger
- PRICE: 156.87 @ 06:50 BST Sep 11
- SUP 1: 156.79 Intraday low
- SUP 2: 156.57 38.2% retracement of the Jul 28 - Aug 30 rally
- SUP 3: 155.54 Low Aug 3
- SUP 4: 154.61 61.8% retracement of the Jul 28 - Aug 30 rally
The recent pullback in EURJPY is considered corrective and the trend outlook remains bullish. Key support to watch is the 50-day EMA - at 156.81. This average has been pierced today. A clear breach of it would undermine the uptrend and highlight a possible short-term reversal. On the upside, the next bull trigger is 159.76, the Aug 30 high where a break would confirm a resumption of the uptrend. This would open 160.66, a Fibonacci projection.
