BONDS: EGBs-GILTS CASH CLOSE: Mixed After Initial Rally
EGB and Gilt yields finished up from their intraday highs Tuesday to trade mixed overall.
- Early trade was constructive, with Friday's poor US employment report continuing to buoy core instruments. At the onset of the session, the 10Y Bund yield hit its lowest intraday levels since Jul 23; for Gilts, Jul 2.
- However yields would mostly drift higher from there despite few evident catalysts, as equities and the US dollar pulled back.
- Data was relatively non-impactful. We saw above-expected Spanish and French industrial production alongside slight downward revisions to Eurozone final July services/composite PMIs, with UK services PMI seeing an upward revision. Eurozone June PPI was a touch lower than expected.
- A soft US ISM Services reading saw bonds rally, though a higher prices paid component muted the impact.
- For the session, both the UK and German curves leaned slightly flatter, with Gilts underperforming despite a solid 10Y UK auction. Periphery/semi-core EGB spreads were mostly tighter on the day, with 10Y BTPs failing to close below the 80bp mark to Bund.
- German factory orders highlight Tuesday's docket, with Italian industrial production and Eurozone retail sales also due. Thursday's BOE decision remains the calendar highlight of the week - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.7bps at 1.908%, 5-Yr is down 0.2bps at 2.215%, 10-Yr is unchanged at 2.624%, and 30-Yr is up 0.3bps at 3.138%.
- UK: The 2-Yr yield is up 2bps at 3.826%, 5-Yr is up 1.8bps at 3.956%, 10-Yr is up 0.7bps at 4.516%, and 30-Yr is up 1.2bps at 5.339%.
- Italian BTP spread down 0.1bps at 80.2bps / French OAT down 0.3bps at 65.9bps
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Trend Outlook Remains Bearish
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.3674/3776 20- and 50-day EMA values
- PRICE: 1.3607 @ 16:12 BST Jul 4
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
The trend needle in USDCAD points south and this week’s move down reinforces current conditions. S/T gains between Jun 16 - 23 appear to have been corrective. Key support and the bear trigger is 1.3540, Jun 16 low. Clearance of this level would resume the downtrend and open 1.3503, a Fibonacci projection. Pivot resistance is at the 50-day EMA, at 1.3776. A clear break of this average would signal scope for a stronger recovery.
AUDUSD TECHS: Bull Cycle Remains In Play
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01
- PRICE: 0.6548 @ 16:05 BST Jul 04
- SUP 1: 0.6521 20-day EMA
- SUP 2: 0.6468/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and the pair is holding on to its recent gains. The latest break higher maintains the bullish price sequence of higher highs and higher lows, the definition of an uptrend. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 0.6603 next, the Nov 11 2024 high. Key short-term support has been defined at 0.6373, the Jun 23 low.
EURJPY TECHS: Northbound
- RES 4: 171.88 High Jul 19 ‘24
- RES 3: 171.28 1.382 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 2: 171.09 High Jul 23 ‘24
- RES 1: 170.61 High Jul 03
- PRICE: 170.22 @ 16:04 BST Jul 04
- SUP 1: 169.04 Low Jul 02
- SUP 2: 167.87 20-day EMA
- SUP 3: 167.13 Low Jun 20
- SUP 4: 165.66 50-day EMA
EURJPY traded higher on Thursday resulting in a print above 170.47, the 76.4% retracement of the Jul 11 - Aug 5 sell-off. A clear break of this price point would strengthen bullish conditions and signal scope for extension. This would open 170.28 next, a Fibonacci projection. The trend is overbought, a pullback would unwind this condition. Support to watch lies at 167.87, the 20-day EMA.
