IRON ORE: Iron Ore Testing 20-day EMA Resistance, Firmer China Property Equities Helping
The active SGX iron ore contract is firmer in the first part of Monday dealings. We were last near $108/ton (a touch above the 20-day EMA). We haven't been able to breach the $110/ton level since early June, which is likely needed to establish more bullish momentum. The 50-day EMA is near this level. Recent lows rest just under $102/ton.
- Earlier we had the Caixin manufacturing PMI print firmer than forecast at 51.8, versus 51.5 forecast and 51.7 prior. This contrasts with the official print from yesterday which remained in contraction territory at 49.5. This continues the recent run of mixed data, although the Citi China EASI is in negative territory and close to multi month lows.
- For June, preliminary data for home sales improved in y/y terms relative to the May read, albeit still comfortably negative at -17%y/y (May was -34%), per BBG. This has seen real estate equities bounce, with such trends better correlated with iron ore in recent months, see the chart below.
- Elsewhere, iron ore inventories continued to climb at China ports to the end of June. The rate of ascent has slowed in terms of inventories, but is still at multi year highs, a potential upside cap on prices amid a mixed activity backdrop for China.
Fig 1: Iron Ore Spot Prices & China Property Equities
Source: MNI - Market News/Bloomberg
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Watching Support
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3748/85 61.8% of the Apr 16 - Mar 16 bear leg / High Apr 30
- PRICE: 1.3644 @ 16:27 BST May 31
- SUP 1: 1.3590 Low May 16 and the bear trigger
- SUP 2: 1.3547 Low Apr 9
- SUP 3: 1.3512 50.0% retracement of the Dec 27 - Apr 16 bull cycle
- SUP 4: 1.3478 Low Apr 4
A bullish trend in USDCAD remains intact and pullbacks from recent highs are deemed corrective. Key supports at 1.3647, the 50-day EMA, and 1.3610, the May 3 low, remain intact. They have recently been pierced, however, a clear break of both price points is required to threaten the bullish theme and signal scope for a deeper retracement. A stronger resumption of gains would refocus attention on the bull trigger at 1.3846, the Apr 16 high.
US TSYS: Rates Off Midweek Lows Ahead Fed Blackout Start
- Treasuries continued to rebound off midweek lows Friday, rebounding/extending highs after in-line PCE Deflator MoM (0.3% vs. 0.3% est); YoY (2.7% vs. 2.7% est) and PCE Core Deflator MoM (0.2% vs. 0.2% est); YoY (2.8% vs. 2.8% est). Meanwhile, Personal Income (0.5% vs. 0.3% est), Personal Spending (0.2% vs. 0.3% est).
- Treasury futures continued to extend session highs, Sep'24 10Y closing in on initial technical resistance of 108-31 (20-day EMA) after latest Chicago PMI data came out lower than expected at 35.4 vs. 41.1 est, and weaker than prior 37.9 in April.
- Current cash yields lower: 2s -.0438 at 4.8810%, 10s -.0396 at 4.5065%, 30s -.0303 at 4.6491%, while curves inch off earlier flatter levels: 2s10s +0.432 at -37.860, 5s30s +1.724 at 12.786.
- Holding steady for the next couple meetings -- late year rate cut projections have gained slightly post data: June 2024 at -0% w/ cumulative rate cut 0.0bp at 5.328%, July'24 at -12% w/ cumulative at -3.5bp at 5.293%, Sep'24 cumulative -14.7bp (-13.9bp pre-data), Nov'24 cumulative -21.7bp (-20bp pre-data), Dec'24 -35.5bp (-32.9bp pre-data).
- Reminder, the Federal Reserve enters it's self imposed policy blackout at midnight, running through June 13, the day after the next FOMC policy announcement.
AUDUSD TECHS: Support Holds
- RES 4: 0.6771 High Jan 3
- RES 3: 0.6751 76.4% retracement of the Dec 28 - Apr 19 bear leg
- RES 2: 0.6729 High Jan 12
- RES 1: 0.6680/6714 High May 28 / 16 and the bull trigger
- PRICE: 0.6638 @ 16:22 BST May 31
- SUP 1: 0.6591 Low May 30
- SUP 2: 0.6587 50-day EMA
- SUP 3: 0.6558 Low May 8
- SUP 4: 0.6465/6407 Low May 1 / Low Apr 22
A bullish cycle in AUDUSD that started Apr 19 remains intact and recent short-term weakness appears to have been a correction. Attention is on the key short-term support at 0.6587, the 50-day EMA. A clear break of this average would signal scope for a deeper retracement and open 0.6558 initially, the May 8 low. For bulls, a resumption of gains would pave the way for 0.6751, a Fibonacci retracement.
