EU: Germany's Merz To Meet w/EU & NATO Leaders 9 May
New German Chancellor Friedrich Merz is set to travel to Brussels on Friday, 9 May, to mark Europe Day. He will meet with European Commission President Ursula von der Leyen, and the two will hold a joint press conference at 1100CET (0500ET, 1000BST). Merz will also hold talks with European Council President Antonio Costa and NATO Secretary-General Mark Rutte.
- Much has been made of Merz's intention to take a much more active role on the foreign policy stage compared to his predecessor Olaf Scholz. This is exemplified by his visit to the two other Weimar Triangle nations on his first full day in office, with a clear attempt to put the three largest defence contributors in the EU front and centre of the Union's security and defence decision-making process.
- As Politico noted in February, this shift could put him if not at odds then at least in some form of competition with VdL, despite both hailing from the centre-right Christian Democratic Union. Politico: "What may look like paper-thin policy differences between the two could well turn into a full-blown power struggle as von der Leyen grapples with Merz’s increasing interest in the EU scene. Von der Leyen hews to the political center, championing green reforms, gender parity and keeping Europe’s internal borders open. Merz, by contrast, is a classic West German conservative who wants deregulation, has spoken out against parity in government, and has no problem shutting Germany’s borders to its neighbors."
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OUTLOOK: Price Signal Summary - EURUSD Trend Structure Remains Bullish
- In FX, EURUSD has pulled back from last week’s high. The trend condition remains bullish and a move lower is considered corrective. Recent gains resulted in the break of key resistance at 1.0955, the Mar 18 high, confirming a resumption of the uptrend. It paves the way for a climb towards 1.1188 next, a 0.764 projection of the Feb 28 - Mar 18 - 27 price swing. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0824, the 20-day EMA.
- Last week’s climb in GBPUSD resulted in a break of 1.3015, the Mar 20 high. This confirms a resumption of the uptrend that started Jan 13 and maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. The latest pullback is considered corrective, key support to watch lies at 1.2792, the 50-day EMA. The bull trigger is 1.3207, the Apr 3 high.
- USDJPY maintains a softer tone following last week’s sharp sell-off. A resumption of the downtrend and a break of Friday’s 144.56 low would signal scope for an extension towards 144.13, the 76.4% retracement of the Sep 16 ‘24 - Jan 10 bull leg. Initial firm resistance to watch is 149.12, the 20-day EMA. Short-term gains would - for now - be considered corrective.
US TSY FUTURES: Light Bias To Short Cover On Friday
OI data points to relatively limited positioning swings in the wings of the curve on Friday, as comments from Fed Chair Powell and the eventual reaction to the NFP release unwound some of the risk-off rally linked to global tariffs.
- That made for modest net short cover in TU & FV futures, alongside modest net long setting in US & WN futures.
- Meanwhile, TY futures were subjected to net short cover and UXY futures saw net long setting.
- Curve-wide, there was a lean towards net short cover.
| 04-Apr-25 | 03-Apr-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 3,986,924 | 3,999,920 | -12,996 | -500,411 |
FV | 6,611,779 | 6,634,316 | -22,537 | -995,139 |
TY | 4,944,168 | 5,002,296 | -58,128 | -3,819,913 |
UXY | 2,353,971 | 2,341,871 | +12,100 | +1,109,175 |
US | 1,862,007 | 1,855,559 | +6,448 | +873,765 |
WN | 1,837,130 | 1,834,721 | +2,409 | +484,790 |
|
| Total | -72,704 | -2,847,732 |
STIR: BLOCK: Sep'25 SOFR Ratio Put Spread
- 3,000 SFRU5 96.12/96.50 3x2 put spds, 27.0 net ref 96.52 at 0630:22ET
