FOREX: GBPJPY Extends Decline as Weak Risk Sentiment Weighs
Jan-13 10:35
- The continued post-NFP themes of a weaker Euro and Pound have continued early Monday. Weak risk sentiment continues to boost the Japanese yen, prompting some significant declines for cross/JPY to start the week.
- EURUSD has traded below the 1.02 handle, registering fresh cycle lows for the pair at 1.0178. Higher European NatGas prices are providing additional single currency headwinds, as equity weakness particularly weighs on EURJPY, down 0.70% on the session with the 160.00 mark supporting for now.
- With the bearish EURUSD trend sequence intact, analysts will now look to 1.0138, the 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing as the next target for the move.
- For sterling, 1.2100 has so far held for cable, however the pair is down 0.85% as the negative backdrop for UK assets continues to permeate. We highlighted last week how 190.60 was the first major target for the move in GBPJPY, a trendline drawn from the Aug low. This trendline has been pierced, with the pullback from the Dec 30 highs briefly extending to 4.5%. Given this development, 188.09 will now be in focus, the Dec 03 low.
- Overall, the USD index is up 0.3% since the open having printed a fresh two-year high above 110.00.
- US Federal Budget balance data highlights a light Monday schedule. US PPI will cross Tuesday before UK and US CPI data on Wednesday.
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
Dec-13 21:13
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
Dec-13 21:00
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
Dec-13 20:40
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
