POWER: France November Power Rises
The French front-month power base-load contract is recovering today, after falling to a new October low in Wednesday’s session, with gains in the wider energy complex amid the announcement of Russian sanctions and a downward revision in temperature forecasts.
- France Base Power NOV 25 up 1.8% at 67.83 EUR/MWh
- France Base Power Week 2 down 0% at 44.5 EUR/MWh
- EUA DEC 25 up 0.6% at 78.9 EUR/MT
- TTF Gas NOV 25 up 1.6% at 32.275 EUR/MWh
- nuclear availability is forecast at 44.95GWh/h on Friday, from 44.04GWh/h on Thursday, Reuters data showed.
- 1.31GW Golfech 2 maintenance has been extended by one week until 16 November.
- EdF issued a strike notice for 24 hours that started on Wednesday at 21:00 CET. So far, strikes have not affected nuclear generation.
- The latest two-week ECMWF weather forecast for Paris suggests mean temperatures have down to remain below or near normal through mid-next week before rising above normal.
- Mean temperatures in Paris are forecast to decline to 10C on Friday, from 13C on Thursday and below the seasonal average of 11.6C.
- Wind output in France is forecast at 12.21GW during base load on Friday, from 18.24GW on Thursday according to SpotRenewables.
- Residual load in France is forecast at 34.49GWh/h on Friday, from 26.94GWh/h on Thursday, Reuters data showed.
- Power demand in France is forecast at 49.99GW on Friday, up from 48.41GW on Thursday, according to Bloomberg.
- France’s hydro balance forecast has been revised down to end at -331GWh on 6 November, from -274GWh previously, Bloomberg data showed.
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GILTS: Firmer On Wider Cues, Supply Provides Litmus Test For Long End Demand
Gilts a touch higher after Bunds & Tsys firm through early London trade.
- Ongoing weakness in crude oil helps provide support.
- Futures back towards yesterday’s high, topping out at 90.91.
- Initial support and resistance 90.60/91.11.
- Yields 1-2bp lower, curve flatter, last week’s lows in 2s10s and 5s30s remain untouched (closing lows are ~6bp away on both curves).
- UK flash PMI data is due today.
- It is also worth noting that the DMO will come to market with 30-Year gilts. Market participants will be watching the demand metrics closely after last week’s PSNB data revealed ongoing fiscal deterioration.
- On the fiscal front, the Resolution Foundation has suggested that Chancellor Reeves could raise ~GBP6bln by cutting employee national insurance contributions by 2ppt and raising the basic rate of income tax by the same amount. Note that this would only cover around 20% of the fiscal shortfall, but it would be a way of not increasing taxes on "working people" and might avoid some more painful taxes elsewhere that could hit growth harder or increase CPI.
- Elsewhere, BoE chief economist Pill will speak via a fireside chat on “Challenges of Monetary Policy in an Environment of High Fiscal and Geopolitical Uncertainty” (10:00 London).
AUDUSD TECHS: Corrective Cycle In Play
- RES 4: 0.6793 1.500 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 1: 0.6660/6707 High Sep 18 / 17
- PRICE: 0.6586 @ 08:07 BST Sep 23
- SUP 1: 0.6575/6547 Low Sep 22 / 50-day EMA
- SUP 2: 0.6527 61.8% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and the latest pullback is considered corrective - for now. The recent rally plus the breach of 0.6625, the Jul 24 high and bull trigger, confirms a resumption of the uptrend. The climb opens the 0.6726 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Key support to watch is 0.6415, the Aug 21 / 22 low. Initial firm support to watch is 0.6547, the 50-day EMA.
RIKSBANK: Rate Decision At 0830BST A Very Close Call Between Cut and Hold
The Riksbank decision is due at 0830BST/0930CET, with consensus split between a 25bp cut to 1.75% and a hold at 2.00%.
- MNI Preview here
- There are credible reasons to motivate either decision.
- We suspect the Board will be equally split (but don’t necessarily think that will be reflected in any formal dissents), with some members advocating for a form of insurance cut given a still-weak labour market and signs that the recent inflation uptick was temporary, and others preferring to wait for more data before determining if another cut is necessary.
- The September decision includes an updated MPR and rate path projection.
