EMISSIONS: EU-UK ETS Spread Hit Four-Month Low On ETS Relink Talk
Mar-21 10:32
EUA/UKA Dec25 spread narrowed to €16.65/ton CO2e on Friday, the lowest level since Oct 2024, amid stronger UKA gains following comments from the UK government that it is considering relinking with the EU ETS.
- “Ahead of the UK-EU Summit on the 19th May, the UK Government is actively considering the case for linking ETSs,” Philip Hunt, minister for energy security and net zero, said on Thursday.
- The UKA rallies this year have been largely driven by news and developments surrounding the potential EU-UK ETS relink.
- The spread previously hit a 16-month high on 17 Jan as UKA Dec25 was trading at a all-time low at €37.34/ton CO2e, while EUA Dec25 was at a eight-month high at €79.26/ton CO2e.
- EUA Dec25 is currently tracking a weekly gain of over 3%, hitting a one-month high, supported by a nearly 4% rise in EU gas prices. Meanwhile, UKA Dec25 is tracking a weekly gain of nearly 7%, reaching its highest level since 14 Feb.
- EUA DEC 25 up 0.45% at 73.34 EUR/t CO2e
- UKA DEC 25 up 1.61% at 47.29 GBP/t CO2e
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EQUITIES: Cash and Futures Estoxx dip to session low
Feb-19 10:22
- A small dip in red territory for the Cash and Futures Estoxx, some Tech flow could be at play, as we pointed that both indices were in Overbought territory going into the cash Open.
- US Emini is still holding onto small gain, and is still overall just 30 points of its record high printed in December at 6178.75.
(Chart source: MNI/Bloomberg).
FOREX: USD Index Creeps to New Daily Highs as Participation Finally Picks Up
Feb-19 10:20
Greenback strength continues to show in recent trade - dragging EUR/USD further off the recovery high posted last week at 1.0514. Move looks isolated from broader risk given the USD's gradual strengthening alongside equities since the beginning of the week, however the very recent drift to session lows for the EuroStoxx future (which hit an alltime high yesterday) could be adding some conviction here.
- For the ICE USD Index, price has bumped back above 107.00 meaning markets have steered clear of a test on the uptrending 100-dma of 106.396. This leaves 107.838 as the next notable intraday level: the 38.2% retracement for the downleg posted off the early February high.
- Volumes were understandably light on Monday (US Presidents' Day) but the muted theme extended into Tuesday and it's only today that we're seeing markets return to form: EUR futures have seen a decent pick up in interest both at the open today and throughout the morning - with focus now shifting to the FOMC minutes due later today.
FOREX: USD Bounce Drags EUR/USD Further Off Recovery High
Feb-19 10:14
- The RBNZ rate decision spurred initial heavy selling in NZD, as markets responded to the 50bps rate cut to prompt a 0.5678 low in NZD/USD. The move proved short-lived, with the rally off lows coinciding with the RBNZ's signals that the OCR may only have limited room to fall further. As such, a short-covering bounce to 0.5732 has stuck, keeping the NZD the strongest performer in G10 headed into the NY crossover.
- The single currency is the poorest performer so far, pressing EUR/USD back below 1.0450 and through yesterday's lows in the process. The move comes as part of the a broader bounce off lows for the USD Index in a move that looks idiosyncratic relative to broader market risk appetite: the EuroStoxx50 continues to plumb alltime highs.
- UK inflation data came in ahead of expectations, however the details show little evidence that should push any MPC votes in either direction - with the upside surprises stemming from core goods and food prices - leaving UK rates markets primed for the next BoE cut at the June meeting.
- Datapoints are few and far between Wednesday, with US housing starts and building permits the primary releases. This should leave markets with plenty of capacity to digest the FOMC minutes later today - at which traders will be on watch for the rationale behind the Fed's recent shift in statement language concerning inflation.
