EMISSIONS: EU Mid-Day Carbon Summary: EUAs Rangebound On EU Gas Volatility
May-08 11:34
{EU}{EUAs Dec25 are trending downward amid EU gas downward momentum near noon, with the EUA-TTF intraday correlation tightening to near 0.70. Meanwhile, UKAs Dec25 are rangebound amid EUAs volatility.
- EUA DEC 25 down 0.14% at 70.96 EUR/t CO2e
- UKA DEC 25 up 0.35% at 52.05 GBP/t CO2e
- TTF Gas JUN 25 up 0.7% at 34.785 EUR/MWh
- NBP Gas JUN 25 up 0.5% at 83.47 GBp/therm
- Estoxx 50 up 1.3% at 5271
- FTSE 100 JUN 25 up 0.5% at 8587
- TTF is edging higher on trade optimism, with the US and China set to hold talks tomorrow, and a US-UK trade deal expected later. Meanwhile, supply risks have eased on a scheduled fall in Norwegian outages tomorrow and rising flows to US LNG export terminals.
- The latest EU ETS CAP3 auction cleared at €70.3/ton CO2e, up 3.57% compared with the previous EU auction at €67.88/ton CO2e according to EEX.
- The EC has issued reasoned opinions to more than 12 Member States for failing to fully transpose revised EU ETS and aviation ETS rules into national law by the 31 December 2023 deadline, it said on Wednesday.
- The EU Council backed the EC proposed amendment to the regulation on CO2 standards for new passenger cars and vans, supporting more flexible rules, it said.
- S&P Global said that while some bigger trading houses have started hedging EU CBAM exposure using EUAs, many importers remain underprepared, especially smaller firms lacking dedicated compliance resources, it said.
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OUTLOOK: Price Signal Summary - Reversal Exposes Key Support In Gilts
Apr-08 11:30
- In the FI space, a bull cycle in Bund futures traded in a volatile manner Monday. For now, a bull cycle remains in play and a pullback is considered corrective. A fresh short-term cycle high yesterday signals scope for a continuation of the uptrend. The contract has cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support to watch lies at 129.15, the 20-day EMA.
- A sharp sell-off in the Gilt futures contract highlights a strong reversal of the recent bull cycle between Mar 27 - Apr 7. A continuation down would expose the next key support located at 90.55, the Mar 27 low. Clearance of this level would confirm a full reversal of the Mar 27 - Apr 7 rally. On the upside, a resumption of gains would initially open 92.70 and 93.38, the 38.2% and 61.8% retracement of the Apr 7 high-low range.
US: Bessent-White House Talked What Countries To Prioritise In Trade Negotiation
Apr-08 11:25
Treasury Secretary Scott Bessent, speaking to CNBC confirms that President Donald Trump will be personally involved in tariff negotiations. Says that any trade negotiations in the future are not as a result of the volatility in financial markets, but 'massive inbound calls' from other countries.
- Says that 'everything is on the table' with regard to what can be negotiated on tariffs, referring specifically to a question on European VAT.
- Bessent says conversations have happened in the White House with regard to what countries to prioritize in trade talks. "If there are solid proposals, we can end up with good deals."
- Bessent: "It would be a mistake for anyone to think [Trump doesn't have the upper hand]."
- Using a poker analogy, Bessent says China is escalating the trade war while "playing with a pair of twos [a weak hand]".
- Bessent says that he was "not involved" in the calculation of the numbers of 'reciprocal' tariffs.
FOREX: NZDUSD Bounces Well from Key Support, RBNZ Decision Wednesday
Apr-08 11:11
- In similar vein to its antipodean counterpart, NZD bounced well overnight amid the recovery for risk sentiment. Yesterday’s low ~0.5510 for NZDUSD matched closely with the 2022 lows, increasing the significance of this area of technical support.
- Overall, the latest developments have prompted moving average studies to move into a bear mode position, underpinning the bearish momentum for NZDUSD. Downside was exacerbated on a break back below a short-term pivot at 0.5711 on Friday, which now provides resistance for the pair.
- SocGen believe that latest developments re Japan and China support the idea that tariffs could be lowered as deals are made. They say that long AUD/NZD appeals if as expected the RBNZ remains dovish and cuts rates again overnight.
- A 25bp rate cut is unanimously expected, bringing the OCR to 3.50%. Data have remained soft but still signal a gradual recovery and so the MPC is likely to ease in line with its February guidance, while maintaining its easing bias. RBNZ dated OIS is pricing a cumulative 98bps by November 2025. Our preview of the RBNZ meeting is here: https://mni.marketnews.com/3RF3qIF
