BRAZIL: Local Assets Buoyed By Hopes Of Lula-Trump Meeting, Consumer Conf. Due
Sep-24 10:47
- After news emerged yesterday that President Trump will meet with President Lula next week, Brazil’s Foreign Affairs Minister Mauro Vieira said in an interview with CNN that this could be done by phone or video call as their busy schedules make a face-to-face meeting difficult.
- Nonetheless, hopes of a thaw in relations between the two helped support local assets which outperformed yesterday, with the IBOVESPA rising 0.9%, DI swaps rates rallying up to 9bp and USDBRL closing 1% lower at 5.2824, just above cycle lows. A bearish tone in USDBRL remains intact, with sights on 5.2405, the Jun 6 2024 low and the 5.2000 handle.
- On the fiscal front, Lower House speaker Hugo Motta said in a post on X yesterday that the Lower House will vote on the income tax bill on October 1. Separately, Finance Minister Haddad said that the time may have come to consider tax loss reform. Speaking at an event in Brasilia, he said that there is a possibility that the finance ministry will consider reforming the way corporate losses are used to offset some tax debts.
- Today, Haddad attends a public hearing of the Lower House’s Committee on Agriculture, Livestock, Supply and Rural Development at 1400BST(0900ET).
- Datawise, September consumer confidence figures cross at 1200BST(0700ET). Meanwhile, the BCB will hold an FX credit line auction of up to $2bn for the rollover of contracts expiring on Oct 2.
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OUTLOOK: Price Signal Summary - EURUSD Trend Structure Remains Bullish
Aug-25 10:47
- In FX, the trend set-up in EURUSD remains bullish and Friday’s rally reinforces current conditions. Support at the 50-day EMA remains intact, at 1.1596. A clear break of it would signal scope for a deeper retracement and potentially expose key support at 1.1392, the Aug 1 low. For bulls, a stronger resumption of gains would open key resistance and the bull trigger at 1.1829, the Jul 1 high.
- Strong gains on Friday in GBPUSD signals the end of the recent corrective phase - Friday’s reversal pattern is a bullish engulfing candle. An extension higher would refocus attention on the short-term bull trigger at 1.3595, the Aug 14 high. Clearance of this level would signal scope for a climb towards 1.3636, 76.4% of the bear leg between Jul 1 and Aug 1. Key short-term support has been defined at 1.3391, the Aug 22 low.
- USDJPY traded sharply lower Friday highlighting a potential bearish threat. The bear trigger has been defined at 146.21, the Aug 14 low. Clearance of this level would reinstate a downtrend and pave the way for an extension towards 145.40, the 50% retracement of the Apr - Aug upleg. For bulls, a resumption of gains would instead open 149.12, 61.8% of the Aug 1 - 14 bear leg.
US TSY FUTURES: September'25-December'25 Roll Update - Massive Volume
Aug-25 10:37
Latest Tsy quarterly futures roll volumes from September'25 to December'25 below. Percentage complete jumped to over a third of outstanding Sep'25 open interest after Friday's massive volume. "First Notice" date next week Friday, August 29. Current roll details:
- TUU5/TUZ5 appr 91,400 from -8.75 to -8.5, -8.75 last; 41% complete
- FVU5/FVZ5 appr 69,500 from -5.25 to -5.0, -5.25 last; 39% complete
- TYU5/TYZ5 appr 198,500 from -1.25 to -1.0, -1.25 last; 38% complete
- UXYU5/UXYZ5 app 138,800 from -0.5 to +0.0, -0.5 last; 37% complete
- USU5/USZ5 appr 25,400 from 12.5 to 13.0, 12.75 last; 41% complete
- WNU5/WNZ5 appr 48,000 from 7.5 to 8.0, 7.75 last; 41% complete
- Reminder, Sep futures don't expire until next month: 10s, 30s and Ultras on September 22, 2s and 5s on September 30. Meanwhile, Sep'25 Tsy options will expire LAST Friday, August 22.
US 10YR FUTURE TECHS: (U5) Trend Structure Remains Bullish
Aug-25 10:37
- RES 4: 113-23 76.4% retracement of the Sep’24 - Jan’25 sell-off
- RES 3: 113-07 76.4% retracement of the Apr 7 - 11 sell-off
- RES 2: 112-23 High May 1
- RES 1: 112-15+ High Aug 5 and the bull trigger
- PRICE: 112-01+ @ 11:26 BST Aug 25
- SUP 1: 111-13 50-day EMA
- SUP 2: 110-23+/08+ Low Aug 1 / Low Jul 15 & 16
- SUP 3: 110-03 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 4: 109-28 Low Jun 6 and 11
A bullish theme in Treasury futures remains intact and the contract continues to trade above support around the 50-day EMA, at 111-13. A clear break of this average would expose support at 110-23+, the Aug 1 low. For bulls, sights are on 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-23 initially, the May 1 high.
