EU: Gentiloni-No Debate On New EU Borrowing Yet, Special Framework For Def Exp
European Commissioner for Economy Paolo Gentiloni has stated that he believes defence spending should have special treatment under EU fiscal rules. Gentiloni said that increased expenditure on EU defence would, "require a more supportive framework of fiscal rules and potentially new tools at the European level".
- Also says that 'the discussion around new EU joint borrowing is unlikely to take place now" Says that focus at present is on the "emergency reaction". Says that, "The discussion will take place in a few weeks when we have a clearer picture of the economic impact of this [Ukraine] crisis." Adds that the talks will have to take place at some point, "We cannot put this off the table"
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USDCAD TECHS: Holding Above Key S/T Support
- RES 4: 1.2964 High Dec 20 and a key resistance
- RES 3: 1.2924 High Dec 22
- RES 2: 1.2843 76.4% retracement of the Dec 20 - Jan 19 sell-off
- RES 1: 1.2797 High Jan 28 and a key resistance
- PRICE: 1.2748 @ 16:55 GMT Feb 18
- SUP 1: 1.2636 Low Feb 10 and key short-term support
- SUP 2: 1.2560 Low Jan 26
- SUP 3: 1.2451/48 Low Jan 19 / 76.4% of the Oct - Dec rally
- SUP 4: 1.2387 Low Nov 10
USDCAD sits toward the bottom end of the recent range, but is holding above support at 1.2636, Feb 10 low. While this level holds, a positive outlook remains intact following the recent recovery from 1.2451, Jan 19 low that resulted in a move above the 50-day EMA and a climb through 1.2768, 61.8% of the Dec 20 - Jan 19 sell-off. The focus is on 1.2843, the 76.4% value. On the downside, a sub 1.2636 levels would threaten the bullish theme.
WHITE HOUSE: Biden Speaking On Ukraine Now
The event can be watched here.
- White House: 'President Biden Gives an Update on our Continued Efforts to Pursue Deterrence and Diplomacy, and Russia’s Buildup of Military Troops on the Border of Ukraine'.
- Vice President Kamala Harris and Secretary of State Blinken are in Munich.
- Defence Secretary Lloyd Austin is in Poland.
US TSYS: Cautious Markets Ahead Long Weekend, Russia/Ukraine Tension High
Long weekend ahead: US markets closed for Presidents Day holiday Monday, while US officials are on high alert over Russia positioning for attack on Ukraine.
On/off risk action (more the latter through the US Session) continued Friday.
- After falling more than 2% Thu, SPX eminis bounced early overnight on reports US Sec of State Blinken will meet w/ Russian foreign minister Lavrov next week (providing Ukraine isn't invaded) in ongoing attempts to find diplomatic solution to tensions. Reports separatists in Donetsk, East Ukraine evacuating some 700k women and children to Russia, report of car bomb in city center, Denials, reprisals and threats of sanctions -- saw equities fall through technical support.
- Tsy futures rallied, curves bull flattened after steepening Thu, 30YY fell to 2.2363% low. Late Friday: 2-Yr yield is up 0.8bps at 1.4737%, 5-Yr is down 1.4bps at 1.8255%, 10-Yr is down 3.3bps at 1.9286%, and 30-Yr is down 4.6bps at 2.2486%.
- March Pricing Trimmed Further On Williams: Fed Funds pricing for Mar 16 has fallen from 34bp to 31bp after NY Fed’s Williams said he doesn’t see a compelling argument for a big first rate increase, another voice to lean towards a 25bp hike. In turn, lead quarterly Eurodollar futures climbed to 99.37 high after tapping 99.3375 on large -20k EDH2 sale Block at 99.34.
- Decent futures volumes as Mar/Jun rolling picked up, March Tsy option expiration a contributing factor.
- On market return Tuesday: housing data, Markit PMIs, flurry of Tsy auctions, NY Fed buy-op on tap.
