EURIBOR: Little Changed To A Touch Softer
Sep-27 2023 06:34
Euribor futures sit flat to -1, with Bund futures in line to a touch below levels seen around the time of yesterday’s Euribor settlement.
- Late Tuesday saw ECB’s Holzmann (hawk) note that it’s unclear if the ECB has reached terminal rate levels, as he chose not to exclude the idea of further rate hikes given upside inflation risks and the potential for upside economic surprises. Holzmann also pointed to his preference for a quicker move re: PEPP QT, while noting that he wouldn’t be in favour of outright APP sales.
- Today’s maturity re: TLTRO-III.5 funds will drain liquidity from the system, but is a longstanding known.
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BUNDS: Around Flat At End Of Asia Trade
Aug-28 2023 06:24
Bund futures +5.
- The contract saw a small gap lower overnight, likely linked to firmer Chinese equities, before a bid in U.S. Tsys and a move off best levels for Chinese equities lent fresh support.
- Friday’s Jackson Hole messaging, while not groundbreaking, reaffirmed the higher for longer narrative, allowing the German curve to flatten on the day.
- As a reminder, ECB President Lagarde underscored the idea that interest rate levels will move as high as necessary to bring inflation back to target.
- Elsewhere, Governing Council member Kazaks noted he would err on the side of tighter monetary policy vs. allowing the risk of the re-acceleration of inflation. Meanwhile, Governing Council hawk Holzmann suggested that rates will have to move “somewhat higher.”
- Monday will see liquidity thinned by the observance of a UK public holiday.
- Eurozone money supply headlines a thin regional data docket, while comments from ECB hawks Nagel & Holzmann are eyed.
- Lastly, the EU will come to market with a 3/18-year EU-bond auction: Up to E1.5bln of the on-the-run 3-year 2.75% Oct-26 EU-bond (ISIN: EU000A3K4D82) and up to E1.5bln of the 0.45% Jul-41 EU-bond (ISIN: EU000A3KT6B1).
RATINGS: Austrian Outlook Marked Up To Neutral At Fitch
Aug-28 2023 06:13
Sovereign credit rating reviews of note from after hours on Friday included:
- Fitch affirmed Austria at AA+; Outlook changed to Stable from Negative
- Fitch affirmed Czech Republic at AA-; Outlook Negative
- S&P affirmed Austria at AA+; Outlook Stable
- DBRS Morningstar confirmed Slovakia at A, Stable Trend
USDCAD TECHS: Sights Are On Key Resistance
Aug-28 2023 06:08
- RES 4: 1.3805 High Mar 24
- RES 3: 1.3732 Trendline resistance drawn from the Oct 13 2022 high
- RES 2: 1.3655 High May 26 and a key resistance
- RES 1: 1.3640 High Aug 25
- PRICE: 1.3586 @ 07:06 BST Aug 28
- SUP 1: 1.3496 Low Aug 21
- SUP 2: 1.3465 20-day EMA
- SUP 3: 1.3390 50-day EMA
- SUP 4: 1.3266 Low Aug 2
USDCAD is holding on to its recent gains. Last week’s gains reinforces the uptrend and maintains the price sequence of higher highs and higher lows. The focus is on 1.3655, the May 26 high. Note that a trendline resistance, drawn from the Oct 13 2022 high, is at 1.3731 and represents an objective further out. Support to watch is 1.3465, the 20-day EMA. A break of this average would signal the start of a correction.
