POWER: German February Power Rebounds on Gas
German front-month power is rebounding on Monday after a steady decline last week, supported by a downward revision in temperature and wind forecasts and a surge in EU gas prices. German spot power is expected to decline with forecasts for higher wind output offsetting higher demand.
- Germany Base Power FEB 25 up 4.2% at 100.06 EUR/MWh
- EUA DEC 25 up 1.5% at 75.99 EUR/MT
- TTF Gas FEB 25 up 4.5% at 47.025 EUR/MWh
- TTF extends gains from Friday amid announced US sanctions on Russian LNG terminals while Russia claims Ukraine drones attempted to attack a Turkstream compressor station, Blomberg said. Operations were not disrupted.
- EU ETS December 2025 allowances briefly hit the highest since 3 January this morning before erasing some gains, with support from the rally in EU gas prices and a downward revision in NW European wind and temperature forecasts. The next EU EUA CAP3 auction will clear today 11:00CET.
- Wind output in Germany is forecast to rise to 20.7GW during base load on Tuesday, up from 10.02GW on Monday. German wind generation is forecast to fall from Wednesday with output to remain low until at least 22 January according to SpotRenewables.
- The latest 6-10 day ECMWF weather forecast for Dusseldorf suggested mean temperatures have been revised down from Friday’s forecast. Mean temperatures are forecast to remain below normal until 15/16 January, when temperatures briefly rise above the average before falling back down until 22 January. Temperatures will rise above normal on 23-25 January, before falling back down.
- Mean temperatures in Dusseldorf are forecast to rise to -0.9C on Tuesday, from -1.2C on Monday.
- Power demand in Germany is forecast to rise to 61.34GW on Tuesday, up from 59.62GW on Monday according to Bloomberg.
- Residual load in Germany is forecast to decline to 36.67GWh/h on Tuesday, down from 46.5GWh/h on Monday according to Reuters.
- Germany’s hydro balance has been revised up from Friday’s forecast to end at 7GWh on 27 January.
- The 840MW Boxberg Q lignite plant will be offline until Tuesday 14:00CET, after coming offline on 11 January. The outage at the 1.05GW Neurath F lignite plant has also been extended until Tuesday morning, after coming offline on 23 December.
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
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
- 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
- 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.
