AUDNZD: Fresh Highs Since 2022, AU-NZ 2yr Spreads Still Trending Towards Flat
Jul-15 22:11
The AUD/NZD got to fresh highs of 1.1136 in Monday trade, levels last seen in October 2022. We sit slightly lower now, last around 1.1130. A firm uptrend in the pair persists. Recent lows have been marked close to 1.1070, while the 20-day EMA is back just under 1.1000. 1.1200 seems like a natural upside target.
- The cross continues to move in lockstep with AU-NZ 2yr swap spreads, which continue to trend towards flat. We were last at -11bps, highs in the spread going back to 2020.
- The respective local data calendars just have NZ non-resident bond holdings out today. All eyes will rest on tomorrow's Q2 CPI print. Last week's dovish RBNZ shift has seen easing odds rise for the second half of this year.
- Interestingly, while a soft result tomorrow (the market expects 0.5% q/q, prior 0.6%, while y/y is forecast at 3.4%, prior 4.0%), will weigh on NZD all else equal, it may also temper Q2 Australian inflation expectations, given the historical correlation for inflation between the two economies.
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USDCAD TECHS: Outlook Remains Bullish
Jun-14 19:30
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3792 High Jun 11
- PRICE: 1.3759 @ 15:52 BST Jun 14
- SUP 1: 1.3667/1.3590 50-day EMA / Low May 16 and the bear trigger
- SUP 2: 1.3547 Low Apr 9
- SUP 3: 1.3512 50.0% retracement of the Dec 27 - Apr 16 bull cycle
- SUP 4: 1.3478 Low Apr 4
USDCAD has managed to recover from Wednesday’s intraday low of 1.3680. Key support is unchanged at 1.3590, the May 16 low. A clear break of this level would threaten a bullish theme and signal scope for a deeper retracement. For now, the trend outlook remains bullish, a continuation higher would signal scope for a climb towards key resistance and the bull trigger at 1.3846, the Apr 16 high.
US TSYS: Tsy Curves Bull Flatten Despite Soft Data
Jun-14 19:19
- Treasury futures look to steady to mixed in the short end, mildly higher out the curve. Treasuries opened higher, taking cues from EGBs again amid ongoing political uncertainty in France after Pres Macron announced a snap election in the aftermath of last Sunday's EU parliamentary elections.
- Rates see-sawed off early morning highs after lower than expected Import/Export data: Import Price Index ex Petroleum MoM (-0.3 vs. 0.2 est, prior down revised to 0.6% from 0.7%) while Export Price Index MoM fall to -0.6% vs. 0.1% est.
- Still off opening highs, Treasury futures gained slightly after lower than expected UofM Sentiment (65.6 vs. 72.0 est, 69.1 prior), Current Conditions (62.5 vs. 72.2 est). Meanwhile, 1 Yr Inflation slightly higher than exp at 3.3% vs. 3.2% est (3.3% prior, however), 5-10 Yr Inflation (3.1% vs 3.0% est).
- The Sep'24 10Y futures contract currently trades +3.5 at 110-26.5 vs. 111-01 high after the bell. Cash yields are running mildly lower: 5s -.0162 at 4.2278, 10s -.0330 at 4.2112%, 30s -.0485 at 4.3479%, while curves flatter: 2s10s -2.362 at -47.841, 5s30s -3.226 at 11.883.
- Rate cut projections look steady to slightly lower vs early Friday (*): July'24 at -12% w/ cumulative at -3bp at 5.298%, Sep'24 cumulative -20bp (21.1bp), Nov'24 cumulative -29.9bp (-31.1bp), Dec'24 -50.5bp (-51.1bp).
US STOCKS: Late Equities Roundup: Paring Early Losses
Jun-14 19:08
- Stocks continue to trade near steady to weaker (DJIA underperforming) in late Friday trade, off early session lows as shorts covered ahead of the weekend. Currently, the DJIA is down 76.02 points (-0.2%) at 38572.96, S&P E-Minis down 6.25 points (-0.11%) at 5432.25, Nasdaq up 8.9 points (0.1%) at 17676.47.
- Information Technology continued to lead gainers for the fourth consecutive session, software and semiconductor outperforming: Adobe is currently up 14.60% after beating 2Q earnings late Thursday citing strong AI demand. Other gainers included Broadcom, adding +3.79% to Thursday's strong gains after beating estimates late Wednesday, ServiceNow +2.56%, Autodesk +1.62%.
- Meanwhile, interactive media and entertainment supported Communication Services in late trade: Netflix +2.87%, Take Two +0.81%, Google +0.62%.
- Industrials and Materials sectors underperformed in the second half, industrial and electric machinery shares weighed on the former: Parker-Hannifin -5.47%, Howmet Aerospace -5.69%, GE Vernova -4.18%. Shares of chemical companies weighed on Materials in late trade: Albemarle -4.07%, Air Products % Chemicals -2.94%, Eastman Chemicals -2.84%.
