FOREX: EUR Extends Winning Streak, 5 Sessions of Higher Highs
Mar-07 10:31
- EUR/USD has extended this week's winning streak despite a more stable European bond market, meaning EUR/USD has posted higher highs in each of the past five sessions, putting the pair closer within range of the $1.0900 handle.
- Antipodean currencies are seeing little reprieve from Trump's decision to avoid the immediate impact of the harshest tariffs against Canada and Mexico. As such, AUD and NZD have rolled off the midweek highs against the dollar, further cementing the 100-dma as near-term resistance in AUD/USD, having posted a failed break on two separate occasions now.
- This leaves the USD mixed against most others, and the USD Index softer. The USD Index is comfortably through the 104.00 handle having closed below Thursday confirming a further close of the pre-election gap. Technical support here undercuts at 103.373 and 102.521.
- In a rare post-payrolls appearance, Fed Chair Powell is set to speak on the economic outlook just a few hours after the NFP print. Text is set to be released, with a subsequent Q&A. Importantly, this means Powell makes one of the final Fed appearances before the media blackout kicks in at the close today.
- Payrolls are expected to print at +160k today - and we don’t expect federal government layoffs and freezing hires to materially show in this report, but the seasonality of the data leaves it susceptible to broader pausing in hiring plans. The unemployment rate is seen holding at 4.0% after a surprise drop in January, in a close call with 4.1%.
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EGBS: Bund Futures Pierce Monday's High, Following USTs Higher
Feb-05 10:28
Bund futures have pierced Monday’s high, currently +47 ticks at 133.59. Regional data/speakers have not been market moving, with major EGB futures following USTs higher through the session.
- Today’s rally in Bunds exposes 133.73 (50.0% retracement of the Dec 2 - Jan 14 bear leg) and 133.86 (Jan 2 high) on the upside.
- The German curve has bull flattened, with 30-year yields ~4.5bps lower today.
- 10-year EGB spreads are within 0.5bps of yesterday’s closing levels. French PM Bayrou is expected to survive two censure motions later this afternoon.
- Eurozone January services/composite PMIs were broadly in line with flash prints, while December PPI was close to consensus.
- The ECB wage tracker was little changed compared to the December release, still pointing to a deceleration of wage growth this year.
- ECB Vice President de Guindos played down the role of the neutral rate in setting near-term policy an interview. This comes ahead of an ECB staff report on the concept on Friday.
- Global focus turns to the US Quarterly Refunding Announcement at 1330GMT/1430CET, with US services sentiment data also due this afternoon.
GOLD TECHS: Impulsive Bull Wave Extends
Feb-05 10:27
- RES 4: $2917.5 - 1.764 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 3: $2900.0 - Round number resistance
- RES 2: $2889.9 - 1.618 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2872.30 - Intraday high
- PRICE: $2842.40 @ 10:26 GMT Feb 5
- SUP 1: $2807.3 - Low Feb 4
- SUP 2: $2746.5 - 20-day EMA
- SUP 3: $2730.6 - Low Jan 27
- SUP 4: $2698.4 - 50-day EMA
A bull cycle in Gold remains in play. Last week’s extension higher and this week’s appreciation, confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2889.9 next, a Fibonacci projection. The first key support to watch is $2698.4, the 50-day EMA. The 20-day EMA is at $2746.5.
GILTS: Firmer On Weaker Stocks & Solid Green Auction Demand
Feb-05 10:22
Gilts extend higher, with core global FI markets supported by the move lower in e-minis (tech earnings and trade war worry drive e-minis lower).
- Decent demand metrics at the latest 1.50% Jul-53 green gilt auction may have factored in during recent trade.
- The auction cover topped the average across all re-openings since February ’23 (3.20x vs. average 2.94 & high of 3.26x), while the tail was narrow at 0.3bp and the low price cleared above pre-auction mids.
- Futures as high as 93.47, +70 on the day, as the bullish short-term corrective phase remains intact.
- Contract nears resistance at the Feb 3 high (93.54).
- A break there would expose Fibonacci resistance (93.64) which protects round-number resistance (94.00).
- Yields 3.5-7.0bp lower as the curve flattens, year-to-date lows intact across all benchmarks.
- BoE-dated OIS to fresh cycle dovish extremes of ~85.6bp.
- SONIA futures flat to +7.0. Dec high in SFIZ5 (96.190) untested.
- Cross-market and macro cues are set to dominate ahead of tomorrow’s BoE decision.
- Our full preview of the BoE decision can be found here.
