EURGBP TECHS: Bear Cycle Remains In Play
- RES 4: 0.8625 High Aug 8 and the bull trigger
- RES 3: 0.8593 High Aug 14
- RES 2: 0.8545 High Aug 21 and a key near-term resistance
- RES 1: 0.8468/8494 High Aug 27 / 20-Day EMA
- PRICE: 0.8426 @ 06:47 BST Aug 29
- SUP 1: 0.8410 Low Aug 28
- SUP 2: 0.8383 Low Jul 17 and a key support
- SUP 3: 0.8340 Low Aug 2 ‘22
- SUP 4: 0.8311 3.00 projection of the Aug 8 - 13 - 14 price swing
EURGBP remains in a bear-mode condition following recent weakness. The extension down reinforces the bearish significance of the recent break of the 50-day EMA. Furthermore, the cross has cleared all key retracement points of the rally between Jul 17 - Aug 8. This undermines a recent bullish theme and exposes 0.8383, the Jul 17 low and a key support. Firm resistance is seen at 0.8494, the 20-day EMA.
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GILT TECHS: (U4) Resistance Remains Exposed
- RES 4: 100.00 Psychological round number
- RES 3: 99.62 1.382 proj of the May 29 - Jun 4 - 10 price swing
- RES 2: 99.23 High Jun 21 and a key resistance
- RES 1: 98.93 High Jul 26 / 18 / 29
- PRICE: 98.69 @ Close Jul 29
- SUP 1: 98.11/97.46 20-day EMA / Low Jul 26
- SUP 2: 96.96 Low Jul 3
- SUP 3: 96.57 Low Jul 1 and a key support
- SUP 4: 96.25 76.4% retracement of the May 29 - Jun 21 bull run
Gilt futures traded higher Monday. This marks an extension of Friday’s strong bounce and opens 98.93, the Jul 18 high, and 99.23, the Jun 21 high. Clearance of both levels would confirm a resumption of the bull cycle that started May 29. This would signal scope for a climb towards 99.62, a Fibonacci projection. For bears, a reversal and break of 97.46, the Jul 26 low, would instead reinstate a bearish threat.
STIR: Will Terminal Rate Expectations For RBA Spike Again?
Ahead of tomorrow’s Q2/June CPI data release, terminal rate expectations are at 4.43%, indicating a 44% chance of an additional 25bp hike.
- For context, terminal rate expectations have spiked twice this year—once in late April to 4.48% and again in late June to 4.52%.
- Both spikes were triggered by higher-than-expected CPI figures.
Figure 1: RBA-Dated OIS: Terminal Rate Expectations
Source: MNI – Market News / Bloomberg
EUROZONE T-BILL ISSUANCE: W/C July 29, 2024
Belgium, and Greece are due to sell bills, whilst France already came to the market this week. We expect issuance to be E8.3bln in first round operations, down from E21.3bln last week.
- Today, Belgium will sell an indicative E2.0bln (E1.8-2.2bln range) of the 3-month Nov 7, 2024 TC.
- Tomorrow, Greece will come to the market to sell E500mln of the new 13-week Nov 1, 2024 GTB.
For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.
