EMISSIONS: EU End-Of-Day Carbon Summary: EUAs/UKAs Rise On EU Gas Rally
{EEUAs Dec25 are rising to the highest level since 1 April, tracking EU gas rally, with the intraday correlation between EUAs and TTF hovering steadily above 0.60 in the afternoon. Meanwhile, UKAs Dec25 are rising to their highest level since June 2024, supported by EUAs gains on the day and growing bullish sentiment ahead of the EU-UK Summit on May 19.
- EUA DEC 25 up 2.82% at 69.37 EUR/t CO2e
- UKA DEC 25 up 2.08% at 50.66 GBP/t CO2e
- TTF Gas JUN 25 up 5.3% at 34.69 EUR/MWh
- NBP Gas JUN 25 up 4.4% at 83.67 GBp/therm
- Estoxx 50 down 0.4% at 5229
- Correlation between EUA/TTF for 30-day period tightened to 0.62 from the 0.59 on the previous day.
- Correlation between EUA/STOXX for 30-day period remained high at 0.50.
- Correlation between EUA/UKA for 30-day period remained high at 0.76.
- Correlation between UKA/FTSE100 for 30-day period remained high at 0.60.
- The EUA Dec25 premium to the UK equivalent remained at a similar level at €9.66/t CO2e.
- TTF has rallied 5% today on Norwegian supply outages and a further decline in US export terminal feedgas. These factors could weigh on injections in Europe, which have been strong recently.
- Gains in ICE EUA futures are considered corrective. The 50-day EMA, at €68.41, has been pierced. A clear break of it would signal scope for a stronger correction and open €70.72, Apr 1 high. Trend signals highlight a downtrend - MA studies are in a bear-mode position. A resumption of weakness would open €63.61, Apr 22 low and €60.07, Apr 9 low. Further out, scope is seen for a move towards €56.76, a Fibonacci projection.
- The latest EU ETS CAP3 auction cleared at €67.88/ton CO2e, up 1.86% compared with the previous EU auction at €66.64/ton CO2e according to EEX.
- ICE debuted the first EU ETS 2 DEC28 futures contract today, with 5 lots traded at €73.5/t. BNEF last forecasted EU ETS 2 prices to average €60-100/ton CO2e in 2027 and to hit €145-190/ton CO2e by 2030.
- EUAs Dec25 open interest declined for three consecutive sessions as of 2 May, reaching the lowest level since mid-March, while prices rose 6% over the same period through three consecutive winning sessions, indicating the rally may have been primarily driven by short covering.
- The EC will release the 2024 total number of allowances in circulation (TNAC) under the EU ETS on 28 May at 18:00 CET, it said.
- Germany has notified the EC of its intention to voluntarily cancel 514k EUAs related to the closure of electricity generation capacities in two ETS installations in 2023, according to the EC.
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AUSSIE 10-YEAR TECHS: (M5) Strong S/T Bounce
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.915 - High Apr 4
- PRICE: 95.860 @ 16:42 GMT Apr 04
- SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.640 - 1.0% 10-dma envelope
Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
USDCAD TECHS: Bearish Structure
- RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 3: 1.4415 High Apr 1
- RES 2: 1.4308 50-day EMA
- RES 1: 1.4242 High Apr 4
- PRICE: 1.4196 @ 17:10 BST Apr 4
- SUP 1: 1.4028 Low Apr 3
- SUP 2: 1.3986 Low Dec 2 ‘24
- SUP 3: 1.3944 61.8% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD rallied Friday, but remains lower on the week after Thursday’s downleg. The move down has confirmed a clear reversal of the bull cycle between Sep 25 ‘24 and Feb 3. Price is through a key support at 1.4151, the Feb 14 low. This signals scope for an extension towards 1.3944, a Fibonacci retracement. On the upside, key short-term resistance is seen at 1.4308, the 50-day EMA.
CANADA DATA: Unexpected Jobs Contraction Boosts Implied April BOC Cut Chances
Canadian employment unexpectedly contracted in March, falling by the most since January 2022 at -32.6k (+10.0k expected, +1.1k prior) in a sign that the trade war with the US is spilling over increasingly into the "hard" data. The unemployment rate ticked up 0.1pp to 6.7%, in line with expectations and below the November 6.9% high, though unrounded it rose from 6.55% to 6.71% - the largest increase since November.
- The drop in employment was largely due to a 62.0k drop in full-time positions (after -19.7k, the 2nd straight drop), with part-time up for the 4th consecutive month at 29.5k (after 20.8k prior) - that mix is clearly indicative of hiring uncertainty among firms.
- The monthly full-time drop was the 2nd largest since the pandemic lows in the labour market (April 2020). Goods producing jobs fell by 12k (2nd consecutive decline), while services shed 21k (wholesale/retail trade and Information, culture and recreation led losses).
- The participation rate dipped 0.1pp to 65.2%.
- Wages were soft, dropping 0.2% M/M for the first drop since November, with the Y/Y rate slipping to 3.6% from 3.8% prior. The rise in permanent employees' wages of 3.5% Y/Y was well below the 4.1% expected (4.0% prior).
- Market-implied probability of an April BOC rate cut rose to as high as 68% after the data before settling the day at around 55%. That compares to 40% prior to Wednesday's US tariffs announcement.
