EMISSIONS: EU Mid-Day Carbon Summary: EUAs Rise On TTF Gains
Jul-10 11:14
EUAs Dec25 are edging up, tracking TTF’s gain, with the EUA-TTF intraday correlation mostly standing above 0.50 through the morning, while market continues to eye on any release from the EU’s informal meeting of environment ministers today. UKAs Dec25 are rangebound amid EUA influence; meanwhile, the open interest in the UKAs Dec24 contract rose by 1.87% on 9 July alongside a 1.7% drop in price, accompanied by a spike in daily trading volume, suggesting that new short positions are being opened to bet on further declines.
- EUA DEC 25 up 0.5% at 70.74 EUR/t CO2e
- UKA DEC 25 down 0.06% at 46.53 GBP/t CO2e
- TTF Gas AUG 25 up 2.1% at 35.035 EUR/MWh
- NBP Gas AUG 25 up 2.6% at 84.15 GBp/therm
- Estoxx 50 up 0.3% at 5460.14
- FTSE 100 SEP 25 up 1.1% at 8977.5
- The latest EU ETS CAP3 auction cleared at €70.44/ton CO2e, up 0.69% compared with the previous EU auction at €69.96/ton CO2e according to EEX.
- TTF front month has moved higher supported by warmer weather outlooks amid expectations of higher cooling demand.
- The EUA-TTF correlation has rebounded in July after weakening in June amid the Middle East conflict, when EUAs were sold off potentially due to portfolio liquidation for market switching or expectations of a softening green agenda, according to BNEF.
- BNEF expects the carbon-gas link to weaken long-term as power sector decarbonisation strengths and geopolitical risks continues to trigger detachment.
- The EC has committed to work closely with non-EU countries to potentially provide CABM flexibility on the electricity sector via market coupling between EU Member States and contracting parties, following the meeting between Energy Community Secretariat and the EC, on 1 July according to Energy Community.
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FOREX: EURGBP Breaches Key Short-Term Resistance
Jun-10 11:03
- The softer-than-expected UK data continues to weigh on sterling Tuesday, and the aforementioned EURUSD demand below 1.14 keeps EURGBP within close proximity of prior session highs at 0.8465.
- While there was a big miss for the very volatile flash PAYE RTI payrolls number at -109k for May, UK wage data were all a bit softer than expected as well, including the key private regular AWE that was two tenths below consensus.
- EURGBP currently stands 0.40% higher on the day, and in the process has breached a key short-term resistance at 0.8440, the 50-day EMA. A clear break of the average is required to highlight a stronger reversal, potentially exposing 0.8541, the May 02 high.
- Dips below the 0.8400 handle have been well supported in recent months, and key support has been defined at 0.8356, the May 29 low. Clearance of this level would be required to resume the technical downtrend.
- In the UK, immediate attention turns to Wednesday’s Spending Review, Thursday’s release of April GDP and the quarterly consumer BOE/Ipsos Inflation Attitudes Survey on Friday.
US TSYS: Mildly Richer Amidst Thin Volumes; 3Y Supply And Headline Watching
Jun-10 11:01
- Treasuries are modestly firmer across the curve, broadly close to earlier highs that have been helped on balance by some intraday weakness in equities in late Asia/early London trading that appears light on drivers.
- Today’s Treasury market focus will be on 3Y supply at the usual 1300ET in what’s otherwise a headline-watching session amidst a blank data docket.
- Today is the second day of US-China trade talks in London (“We are doing well with China. China’s not easy,” Trump told reporters at the White House on Monday. “I’m only getting good reports”). Trump is also set to deliver remarks at Fort Bragg at 1600ET. The WSJ reported that roughly 700 marines are deploying to LA in immigration-related protests.
- Cash yields are 2-3bp lower across the curve.
- Curves sit close to Friday’s recent flats, including 5s30s at 85.5bp vs Friday’s 82.8bps.
- TYU5 trades close to an earlier high of 110-12 (+ 06+) on very low cumulative volumes of 220k.
- The move extends Monday’s lift off Friday’s low of 109-28 as it starts to eye resistance at 110-20 (50-day EMA). A bear threat is still present though with support at 109-26 (May 29 low).
- Data: NFIB small business survey (98.8 vs 96.0 cons after 95.8)
- Coupon issuance: US Tsy to sell $58bn 3Y note - 91282CNH0 (1300ET). Last month’s 3Y saw a small stop (0.2bp) and the bid-to-cover tick up from 2.47x to 2.56x but the indirect take-up retreated.
- Bill issuance: US Tsy to sell $55bn 6-W and $48bn 52-W (1130ET)
OUTLOOK: Price Signal Summary - Bull Cycle In Oil Futures Remains Intact
Jun-10 10:57
- On the commodity front, a bullish theme in Gold remains intact and the latest pullback appears corrective. Medium-term trend signals are bullish - moving average studies remain in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would refocus attention on $3435.6 next, the May 7 high. A break of this hurdle would strengthen bullish conditions. On the downside, the next support to monitor is $3242.4, the 50-day EMA.
- In the oil space, WTI futures are trading higher this week, extending the current bull cycle. The contract has cleared the 50-day EMA and this signals scope for an extension towards $67.14, the 76.4% retracement of the Apr 2 - 9 bear leg. It is still possible that the recovery since early May is a correction. MA studies are in a bear-mode position, highlighting a dominant medium-term downtrend. Support to watch lies at $59.74, the May 30 low. A break would highlight a potential bearish reversal.
