EQUITIES: Eurostoxx50 Futs Extending Bounce

The yield tail of 0.2bp was tighter than all four previous re-openings (range 0.3-0.5bps), while the bid-to-cover ratio was in line with last month’s outing at 2.89x.

• Lowest accepted price of 98.936 above the 98.8985 pre-auction mid price.
• Limited reaction in the secondary price of the Gilt since the results were published, currently trading at 98.988.
• Similarly limited reaction in Gilt futures. 

• Tariffs and trade remain the primary drivers of near-term sentiment, and the President surprised markets again late yesterday in announcing a 50% tariff on copper imports – triggering a near 20% rally in US-listed futures and reminding markets that the White House is not concerned with triggering intraday market vol.
• As such, trade deals and tariffs remain the focus for markets, particularly as even countries that were seen to have sealed agreements with the US – namely the UK – are still subject to tariff risk on August 1st.
• The USD Index is consolidating after the break back above downtrendline resistance drawn off the early February highs earlier in the week. CAD is the poorest performer on the day, while GBP is marginally stronger – but both currencies remain contained inside the recent range.
• The rip higher for EUR/JPY continued apace in APAC trade, with the cross rallying again to touch Y175.43 and the highest level since mid-July last year. This tips the 14-day RSI further into overbought territory, hitting 75 and signalling a further pick-up in upside momentum could be harder to come by without fresh external catalysts in the very near-term.
• Prices are fading somewhat into the NY crossover, however, tipping EUR/JPY off the overnight high and into minor negative territory.
• Final US wholesale inventories and trade sales data for May are the primary data releases Wednesday, however it’s the FOMC meeting minutes due at 1900BST/1400ET that should draw more focus – particularly concerning any discussion among the committee about a possible July rate cut.

• The EUR is extending small broader losses here, testing an intraday low against the JPY, SEK, GBP, CHF and the NOK.
• The SEK is the best performer, with EURSEK now eyeing a test to 10.1359, Monday's low, although better support is seen towards 11.0900.
• The CAD is the only Currency in the red against the EUR, but by a tiny 0.10%.