AUDUSD TECHS: Fresh Trend Low
Aug-17 06:59
- RES 4: 0.6723 High Aug 1
- RES 3: 0.6643 50-day EMA
- RES 2: 0.6577 20-day EMA
- RES 1: 0.6480 High Aug 16
- PRICE: 0.6402 @ 07:58 BST Aug 17
- SUP 1: 0.6365 Intraday low
- SUP 2: 0.6285 Low Nov 4 2022
- SUP 3: 0.6272 Low Nov 3 2022 and a key support
- SUP 4: 0.6215 2.236 proj of the Jun 16 - Jun 29 - Jul 13 price swing
The AUDUSD trend condition remains bearish and Wednesday’s move lower reinforces the current bearish theme. The pair has this week breached support at 0.6458, the May 31 low and bear trigger. This strengthens the downtrend and paves the way for weakness towards 0.6285 next, the Nov 4 2022 low. On the upside, firm resistance is seen at the 20-day EMA - at 0.6577. Short-term gains would be considered corrective.
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BUNDS: Grinding higher in early trading
Jul-18 06:37
- Bund futures have been drifting higher in early European trading, but remain off of yesterday's highs.
- There is some focus this morning on the comments overnight by Bank of Italy President Visco who said that he thought inflation would fall back faster than the ECB's forecasts suggested. The only other scheduled speaker this morning is Banque de France's Villeroy.
- As noted previously, Germany will look to launch its new Schatz via auction this morning, while the ESM will also look to sell bills.
- But there will be focus on external events to the EZ markets - Canadian CPI, US retail sales/IP, oil and equities.
- Our technical analyst notes that the recent break above of the 20-day EMA for Bund futures lends an upward bias to the contract in the short-term but the medium-term trend direction remains lower.
OUTLOOK: What to watch
Jul-18 06:11
- There isn't too much out of Europe this morning with the exceptions of 30-year gilt and Schatz auctions and a scheduled speech by ECB's Villeroy this morning (the theme isn't monpol though).
- Instead the attention will be on North American data with Canadian inflation, US retail sales and US IP the main highlights of the upcoming session.
- In terms of Canadian data, there is still more than two months to the next BoC decision where markets broadly price around a 30% probability of a 25bp hike. Most analysts expect headline CPI to fall to 2.9-3.1%Y.Y. The BoC remains more focused on the three-month run rate of the averages of the median and trim measures which was 3.7% annualized in May (recent statements have noted stickiness in the 3.5-4% range). There is potential for Canadian inflation to have a broader market impact today, given the lack of other key releases.
- In the US advance retail sales are forecast to increase 0.5%M/M with most analysts in a 0.4-0.7%M/M range while IP is expected to come in flat in June.
- Again, give then lack of traditional drivers in the macro space today, there will be increased focus in cross market moves (such as equities and oil).
EUROZONE ISSUANCE: EGB Supply
Jul-18 05:51
Germany, Greece, Spain and France all look to issue this week. We pencil in gross nominal issuance of E29.0bln, down a little from E31.1bln last week.
- Germany will kick off issuance for the week this morning with E6bln of the new 3.10% Sep-25 Schatz (ISIN: DE000BU22023) on offer.
- Greece will look to hold a GGB auction tomorrow with the bond on offer to be announced this afternoon. At auction this year Greece has sold benchmark 10/15/20-year GGBs so far.
- Also tomorrow, Germany will return to the market to hold a 30-year Bund auction. E1bln of the 0% Aug-52 Bund (ISIN: DE0001102572) will be on offer alongside E1.5bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614).
For more on this week's issuance and a look ahead to next week's supply see the PDF here:
