USDCAD TECHS: Has Pierced The 50-Day EMA
- RES 4: 1.3920 High May 21
- RES 3: 1.3862 High May 29
- RES 2: 1.3798 High Jun 23
- RES 1: 1.3747/74 50-day EMA / High Jul 17
- PRICE: 1.3738 @ 08:01 BST Jul 18
- SUP 1: 1.3639/3557 Low Jul 08 / 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD is trading closer to its recent highs. Attention is on resistance at 1.3747, the 50-day EMA. It has been pierced. A clear break of it is required to highlight a possible stronger short-term reversal. This would open 1.3798, the Jun 23 high. For now, a bear trend remains firmly in place. A resumption of weakness would refocus attention on key support at 1.3540, the Jun 16 low. Clearance of this level would confirm a resumption of the downtrend.
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STIR: Euribor Implied Yield Changes Since Last Thursday Remains Fairly Contained
Although the ongoing conflict between Israel and Iran presents a new upside risk to the inflation outlook, changes in Euribor implied yields have been relatively contained since last Thursday’s settlement. Implied yields across the strip have increased 3-6bps across the past four sessions - not enough to materially change the outlook for ECB policy.
- The Euribor implied terminal rate is still indicated by the H6 contract, and is currently 1.82%.
- The curve remains notably more dovish than compared to the April 2 (i.e. pre-Liberation Day) settlement.
- ECB-dated OIS are little changed compared to yesterday’s close, with one more 25bp cut fully priced through the next 12 months.
- Several ECB speakers are due this morning. While they may reference the latest tensions as a risk to the outlook, and a justification of the ECB’s more cautious stance since June, meaningful new policy signals are not expected.
- Final Eurozone May HICP is due at 1000BST. Focus will be on the details, particularly to what extent the services deceleration (3.2% flash vs 4.0% prior) was driven by travel/Easter-sensitive categories.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jul-25 | 1.912 | -1.2 |
| Sep-25 | 1.807 | -11.7 |
| Oct-25 | 1.773 | -15.1 |
| Dec-25 | 1.706 | -21.8 |
| Feb-26 | 1.696 | -22.9 |
| Mar-26 | 1.679 | -24.5 |
| Apr-26 | 1.680 | -24.5 |
| Jun-26 | 1.682 | -24.3 |
| Source: MNI/Bloomberg Finance L.P. | ||
GILT TECHS: (U5) Support Remains Intact
- RES 4: 94.15 2.000 proj of the May 22 - 27 - 29 price swing
- RES 3: 94.00 Round number resistance
- RES 2: 93.73 1.764 proj of the May 22 - 27 - 29 price swing
- RES 1: 93.13./93.68 61.8% of Jun 13 - 16 downleg / High Jun 13
- PRICE: 92.69 @ Close Jun 17
- SUP 1: 92.23 Low Jun 16
- SUP 2: 92.17 20-day EMA
- SUP 3: 91.56 Low Jun 9
- SUP 4: 91.44 Low Jun 8
A bullish condition is Gilt futures remains intact and last Friday’s steep sell-off from the session high is - for now - considered corrective. The move higher last week marks an extension of the recent breach of resistance at 91.87, the May 20 high. This signals scope for a test of 93.73, a Fibonacci projection point. Note the uptrend is in overbought territory, a deeper pullback would unwind this position. Initial firm support lies at 92.17, the 20-day EMA.
GILTS: Opening calls
Gilt Calls: 92.59/92.63 range, they don't take the data into account.
