EQUITIES: EU Cash Opening calls
Estox 50: -0.18%, Dax: -0.18%, CAC: -0.01%, FTSE -0.06%, SMI -0.03%.
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AUDUSD TECHS: Northbound
- RES 4: 0.5682 High Nov 12 ‘24
- RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 2: 0.6528 High Nov 29 ‘24
- RES 1: 0.6515 Intraday high
- PRICE: 0.6486 @ 07:53 BST May 7
- SUP 1: 0.6379/6333 20- and 50-day EMA values
- SUP 2: 0.6275 Low Apr 14
- SUP 3: 0.6181 Low Apr 11
- SUP 4: 0.6116 Low Apr 10
AUDUSD had traded to a fresh short-term cycle high, today. A bullish theme remains intact. The recent breach of 0.6450, the Apr 29 high, confirms a resumption of the uptrend and maintains the current sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position, highlighting an uptrend. Sights are on 0.6528, the Nov 29 ‘24 high. Initial key support to monitor is 0.6333, the 50-day EMA.
STIR: 95bp Of Cuts Still Priced Through Dec, Tomorrow's Guidance Eyed
GBP STIRs are little changed this morning, looking through the previously covered Chinese policy easing announcement and reports pointing to the U.S. and UK nearing a trade accord.
- SONIA futures flat to +1.5.
- BoE-dated OIS is within 1bp of yesterday’s closing levels, showing 95bp of cuts through year-end. A reminder that ~88.5bp of cuts were priced through year-end early yesterday after over 100bp of easing was priced over the same horizon last week.
- The next 25bp cut is still fully discounted come the end of tomorrow’s decision.
- An outcome other than a 25bp cut would be surprising but there will be a number of things to watch: any changes to the guidance and the inflation/growth forecast changes, the vote split and the introduction of new scenarios.
- For the guidance we expect "restrictive" and "careful" to remain but we question whether "gradual" will be removed and talk through the rationale for this potential change.
- On the vote split, consensus expects 8-1 but neither Dhingra nor Mann dissenting for a 50bp cut would be a huge surprise. Taylor or Ramsden are plausible possible dissenters that would be more noteworthy - and any other member voting for a 50bp cut or for Bank Rate on hold would be a huge surprise.
- Click for our full preview.
- Expect macro news flow and cross-market moves to dominate between now and the BoE decision, with little of note on the UK calendar in that period.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.200 | -25.9 |
Jun-25 | 4.064 | -39.5 |
Aug-25 | 3.861 | -59.9 |
Sep-25 | 3.721 | -73.9 |
Nov-25 | 3.560 | -89.9 |
Dec-25 | 3.510 | -94.9 |
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