EMISSIONS: EU Mid-Day Carbon Summary: EUA, UKA Fall on Geopolitical Uncertainty
EUAs and UKAs Dec26 are trending lower, diverging from EU equities, as markets reassess the prospects of US-Iran peace talks. The 30-day correlation between EUAs and the STOXX index rose to a seven-week high of 0.32 today, remaining the strongest among correlations with gas, oil and other global equity indices.
- EUA DEC 26 down 1.63% at 74.89 EUR/t CO2e
- UKA DEC 26 down 2.5% at 49.59 GBP/t CO2e
- TTF Gas MAY 26 up 1.6% at 40.945 EUR/MWh
- NBP Gas MAY 26 up 1.3% at 102.6 GBp/therm
- Estoxx 50 up 0.4% at 6004.8
- FTSE 100 JUN 26 up 0% at 10616
- The latest EU ETS CAP3 auction cleared at €73.9/ton CO2e, down 1.26% compared with the previous EU auction at €74.84/ton CO2e according to EEX.
- ICE EUA futures continue to trade toward the upper end of the recent range. Last week’s price action sees the Dec26 future rally to a new multi-month high, working against and partially reversing the bearish trend condition. This makes 78.51 a viable target, the 200-dma, a clean break above which would be the first since July last year. Resistance also opens into €78.43, a key Fibonacci retracement. A resumption of the bear trend would open €61.69, the Apr 9 low ‘25 low.
- European climate societies urged the EU Commission to expand the aviation scope in the EU ETS to all departing flight from Europe, according to the joint letter.
- The emission under the EU ETS in the Netherlands in 2025 rose to four-year high by 2.3% y/y to 72 megatonnes, driven mainly by increased electricity export, according to Dutch Emissions Authority.
- Foresight Solar Fund, a solar and battery storage investor, said that the UK government's decision to remove the Carbon Price Support (CPS) from April 2028 will have only a modest effect on its net asset value (NAV), reported by Proactive.
- TTF traded softer earlier in the session before reversing into positive territory, supported by outages in Norway, revised lower temperature forecasts, and additional geopolitical support after Trump’s comments suggesting Iran has repeatedly violated the ceasefire
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USDCAD TECHS: Key Resistance Remains Intact For Now
- RES 4: 1.3845 High Jan 22
- RES 3: 1.3800 High Jan 23
- RES 2: 1.3753 High Mar 03 and key resistance
- RES 1: 1.3748 High Mar 19
- PRICE: 1.3714 @ 17:00 GMT Mar 20
- SUP 1: 1.3670/3526 20-day EMA / Low Mar 09
- SUP 2: 1.3482 Low Jan 30 and the bear trigger
- SUP 3: 1.3420 Low Sep 25 ‘24
- SUP 4: 1.3400 50.0% retracement of the 2021 - 2025 uptrend
Attention in USDCAD is on key near-term resistance and a bull trigger at 1.3753, the Mar 3 high. A clear break of this hurdle would confirm a range breakout, highlight a stronger bull cycle and confirm a clear breach of the 20- and 50-day EMAs. This would open 1.3800 initially, the Jan 23 high. For bears, a reversal would refocus attention on 1.3482, the Jan 30 low and bear trigger.
AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.7284 High Jun’22
- RES 3: 0.7256 2.500 proj of the Nov 21 - Dec 10 - 18 price swing
- RES 2: 0.7208 61.8% of the Feb 25 ‘21 - Apr 9 ‘25 bear leg
- RES 1: 0.7187 High Mar 11 and the bull trigger
- PRICE: 0.7039 @ 16:59 GMT Mar 20
- SUP 1: 0.6979 50-day EMA and key support
- SUP 2: 0.6944 Low Mar 3
- SUP 3: 0.6897 Low Feb 6
- SUP 4: 0.6834 Low Jan 23
The trend condition in AUDUSD is unchanged, it remains bullish and the pair continues to trade above key support at 0.6979, the 50-day EMA. A clear break of this average would undermine the current bullish theme. The moving average set-up is in a bull mode position and this continues to highlight a dominant medium-term uptrend. A resumption of the trend would open 0.7208 next, a Fibonacci retracement point.
BOE: Summary of Analyst Views
- Just over half (11/21) of the analyst reviews that we have read still look for the next move from the MPC to be a cut. 4/21 look for a hike while 6/21 look for the Bank to remain on hold for their forecast horizon.
- In terms of those expecting hikes Daiwa, JP Morgan and Rabobank all look for the first hike in April with the former two looking for a 4.25% peak and Rabobank looking for a one-and-done. NatWest Markets look for the first hike in Q4-26 but then expect two further hikes in Spring 2027 to the highest peak of 4.50% seen in any analyst base case that we have seen.
- Note that of these analysts, 3/4 (all except NatWest Markets) expect cuts back to a least current levels within their forecast horizon.
- In terms of those looking for the next move to be a cut, none look for a move in April with 5 analysts expecting a June cut, 1 for July, 2 for November and the remaining 3 looking for cuts to begin in 2027.
- UniCredit has the lowest terminal rate, continuing to look for 2.75% while 4/21 analysts look for 3.00% terminal, 6/21 analysts look for 3.25% and 1/21 analyst looks for 3.50%. As noted above, NatWest Markets looks for hikes with no reversal but the remaining 8/21 analysts look for no moves from 3.75% throughout the forecast horizon.
