POWER: End of Day Power Summary: CWE Holds Onto Losses
Dec-16 16:41
The German and French front month futures have held on to losses from the midday session as the TTF equivalent remained red, with declines in emissions prices further weighing on the contracts. The FR-DE Jan 25 discount is currently at its lowest since 9 December at €14.10/MWh at the time of writing, with average temperatures in Dusseldorf revised up for some days compared to a mostly sustained downward revision in Paris.
- France Base Power JAN 25 down 5.2% at 82.55 EUR/MWh
- Germany Base Power JAN 25 down 5.1% at 96.65 EUR/MWh
- EUA DEC 24 down 1.8% at 63.24 EUR/MT
- TTF Gas JAN 25 down 3.6% at 39.75 EUR/MWh
- Rotterdam Coal JAN 25 down 1.6% at 107.4 USD/MT
- The TTF has continued to trade in the red as downward pressure has been placed by weaker demand expectations, due to warmer, windier weather, and the potential for higher-than-expected gas supplies – owing to optimism by Turkstream's booked capacity for January at 2.8mcm/d.
- EU ETS Dec24 remain down as above normal temperatures, and falling gas and coal prices have weighed down the contract ahead of its expiry.
- The EIB will provide a €243mn loan to ERG Group to support 270MW of renewable energy projects across Italy, France, and Germany, with the works to be completed by 2025.
- The Epex Spot Exchange Council has approved a mandate to enhance fallback measures for electricity markets during decoupling scenarios, with aim to strengthen the EU market coupling process.
- German gas-fired power generation so far this month is on track to be the highest for any month since at least 2024 and 2023. However, seasonally lower demand paired with forecasts for above-normal temperatures and high wind output may weigh on German gas-fired output for the remainder of the month.
- Renewables accounted for 55% of Germany’s power demand in 2024, up from 53% in 2023 due to increased output from offshore wind and solar PV.
- Italy’s government plans to extend power distribution concessions for Italy’s utilities in return for new investment in the country’s electricity grid infrastructure.
- Polish PEJ has chosen BNP Paribas France and KPMG Advisory as advisors to assist in securing debt financing for Poland's first nuclear power plant.
- The Swedish government has unveiled new regulations to streamline the construction and use of internal electricity grids, removing the need for special permits under the Electricity Act.
- The unplanned outage on the 1.4GW NorthSea Link power interconnector between the UK and Norway (NO2) has returned 9h earlier on Monday at 15:00CET.
- Romania has allocated 1.5GW of renewable energy projects via a tender through an EU-funded CfD scheme.
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US OUTLOOK/OPINION: US Macro Weekly: Fed Shifts Hawkish As Disinflation Stalls
Nov-15 21:51
Our weekly US Macro publication is out (PDF):
- US “Inflation Week” brought largely in-line results, with sequential core CPI coming in a little lower than expected, and headline CPI and core PPI a little higher than expected.
- But overall the takeaway was that there was relatively little if any disinflationary progress in October, exacerbated by what looks like a small sequential acceleration in the core PCE reading for the month.
- The cumulative effect of surprisingly hawkish Fed commentary combined with the slight upside in core PCE (with a helping hand from solid initial jobless claims among other data demonstrating continued resilience) saw a notable shift in rate cut pricing this week.
- The December FOMC meeting appears to be "live", nearing 50/50 implied probability of a hold at one point Friday morning, versus closer to 20% at the start of the week.
- At the end of this document we highlight two major shifts in FOMC tone this week: one is that a "pause" was introduced as a possibility by a senior FOMC member (Gov Kugler); the other is that there is growing concern over the implications of soaring longer-end rates.
- Neutral rate-talk also dominated, and in a hawkish direction - Dallas Fed's Logan mused that the Fed had already perhaps already reached neutral rates.
- It's probably still the case that the FOMC is still in the "thinking about thinking about slowing rate cuts" stage, which means a December cut is the default. But some of the groundwork for a less dovish rate cut path appears to have been laid since the US election (the potentially hawkish implications of which, FOMC members didn't venture into).
- This week’s heavy data slate gives way to a quieter schedule Nov 18-22, with key macro highlights including flash November PMIs and housing market data, with FOMC speakers also of interest after this week’s shift (including Cleveland Fed Pres Hammack).
US OUTLOOK/OPINION: Atlanta Fed GDPNow Steady, PCE Upgraded Despite Control Miss
Nov-15 21:08
The Atlanta Fed's GDPNow estimate for Q4 remained steady at 2.5% Q/Q annualized in the Nov 15 update, reflecting higher personal consumption expenditures (now 2.8% vs 2.7% in the prior day's update), offset by downgrades to equipment/ nonresidential structure investment.
- The stronger PCE figure comes despite a softer-than-expected Retail Sales Control Group figure - we think this is a reflection of the higher revision to September's Control Group, which will statistically carry over into the Q4 growth rate.
USDCAD TECHS: Bull Cycle Extension
Nov-15 21:00
- RES 4: 1.4210 2.0% 10-dma envelope
- RES 3: 1.4140 1.500 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4122 3.0% Upper Bollinger Band
- RES 1: 1.4106 High Nov 15
- PRICE: 1.4077 @ 16:54 GMT Nov 15
- SUP 1: 1.3959 High Nov 1 / 6
- SUP 2: 1.3891/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 3: 1.3785 50-day EMA
- SUP 4: 1.3611 Low Oct 8
A strong rally in USDCAD this week reinforces the current bullish condition. The pair has topped 1.3959, the Nov 1 / 6 high. This break confirms a resumption of the uptrend and has also resulted in a breach of 1.3977, the Oct 13 2022 high. 1.4140 marks the next upside level. Initial firm support to watch lies at 1.3891, the 20-day EMA. A short-term pullback would be considered corrective.
