EMISSIONS: EU Mid-Day Carbon Summary: EUAs/UKAs Diverge
EUAs are trending lower with lower EU gas prices after initial support from the EU-US trade agreement. UKAs diverged from moves in EUAs to edge higher.
- EUA DEC 25 down 1.1% at 70.55 EUR/MT
- EUA SEP 25 down 1% at 70.27 EUR/MT
- ICE UKA Dec25 up 0.8% at 50.49 GBP/MT
- TTF Gas AUG 25 down 1.4% at 32.05 EUR/MWh
- The EUA Dec25 premium to the UK equivalent narrowed to €12.53/t CO2e from the €13.67/t CO2e in the previous day.
- The latest EU ETS CAP3 auction cleared at €70.63/ton CO2e, compared with the previous auction at €68.89/ton CO2e on 24 July.
- EU member states have handed out 75% of their free allocations for industry and heat for 2025 under the EU ETS as of 24 July.
- The EEX EU ETS auction calendar for 2026, that is scheduled to be published this week, may reflect an upward revision to meet the bloc’s REPowerEU monetary targets, which could be bearish for EUAs according to a note from Veyt.
- US President Trump said he reached a trade agreement on Sunday with the EU where the US would set a baseline tariff of 15% for European goods, including automobiles. He said the EU had agreed as part of the deal to buy $750 billion of energy products from the U.S. and invest an additional $600 billion in the U.S.
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
