EMISSIONS: EU End-Of-Day Carbon Summary: EUAs Fall On Gas Volatility
EUAs Dec25 are falling, tracking TTF volatility following Putin declaring ceasefire between May 7-11. UKAs Dec25 are rangebound on EUAs influence, while UK equities gains supporting carbon. Meanwhile, the EUA-UKA spread narrowed to the lowest level since June 2024.
- EUA DEC 25 down 1.46% at 65.46 EUR/t CO2e
- UKA DEC 25 down 0.02% at 47.45 GBP/t CO2e
- TTF Gas MAY 25 down 0.1% at 32.415 EUR/MWh
- NBP Gas MAY 25 down 0.5% at 78.2 GBp/therm
- Estoxx 50 up 0.5% at 5130
- Correlation between EUA/TTF for 30-day period remained high at 0.59.
- Correlation between EUA/UKA for 30-day period remained high at 0.76.
- The EUA Dec25 premium to the UK equivalent at at €9.63/t CO2e.
- The latest EU ETS CAP3 auction cleared at €64.2/ton CO2e, up 0.42% compared with the previous EU auction at €63.93/ton CO2e according to EEX.
- ICE EUA futures are in consolidation mode. The trend remains bearish and the latest recovery is considered corrective. Recent fresh cycle lows reinforce a bearish theme. The sell-off earlier this month resulted in a breach of €61.98, the Oct 9 ‘24 low. Clearance of this level confirmed a resumption of the downtrend and opens €56.76, a Fibonacci projection. The 20-day EMA has been pierced. Resistance at the 50-day EMA is at €68.86.
- In addition to ceasefire announcement, TTF are down as market weighs steady LNG imports to Europe amid muted demand in Asia against rising Norwegian outages and uncertainty around global demand, with US trade negotiations ongoing.
- Analyst have cut EUA prices for 2025 and 2026 driven by lower prices after the US tariff disputes, a Reuters survey of ten analysts showed.
- EUAs outlook remain neutral this week, with power emissions expected to track the seasonal average, Veyt said. Meanwhile, prices may take clue from technical factors and weather conditions.
- EEX will launch EU ETS 2 futures contracts on 7 July, including April and December expiry for the first three years of the new scheme, with the earliest expiry offered for December 2027, it said.
- Without a clear timeline and clarification on whether UKAs will be converted to EUAs or if a new unified product will be introduced, investor confidence will remain fragile, LSEG said.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
