CZK: Koruna Edges Higher, CNB Off'ls Signal Caution
EUR/CZK trades -0.030 at 24.913, extending the recent short-term downtrend. Consolidation below 25.0 would give bears an opportunity to attack Mar 26 low of 24.845. On the flip side, a return above 25.0 would open up nearby DMAs and Apr 7/Jan 17 highs of 25.295/25.317.
- CNB Deputy Governor Eva Zamrazilova told Bloomberg that she will decide between a 25bp cut and a hold at next week's monetary policy meeting. She cast doubt on market pricing pointing to a terminal rate of 3.00% within the next 12 months and suggested that the next rate cut might be the last one in this cycle as a recovering housing market adds to inflation risks.
- 'I'm leaving the decision open for the next meeting. But even if I decide on a cut, it can't be ruled out that it will be the last one in this cycle.'
- 'I would like to help the economy breathe a little easier, and the preferred option is not to keep monetary policy overly restrictive. But it needs to be sufficiently tight to make sure that inflation doesn't quicken again.'
- Zamrazilova is one of the speakers at the ongoing CNB Discussion Forum in Plzen, alongside Governor Ales Michl and Bank Board's Jan Kubicek. Michl said in his keynote speech that the central bank will remain 'hawkish' and 'very cautious' in deciding on any further interest-rate cuts.
- The koruna has generally outperformed the CNB's latest quarterly forecast, which assumed that EUR/CZK would average at 25.2 across Q1 and Q2. This may prompt a revision in the next forecast, which will be published alongside next week's monetary policy meeting.
- The PX Index is slightly softer, last sits 0.2% shy of neutral levels.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
