FRANCE AUCTION RESULTS: LT OATs

The trend set-up in Eurostoxx 50 futures is bullish and the pullback from the Aug 22 high appears corrective - for now. Note that support at 5375.94, the 50-day EMA, has been pierced. A clear break of this average would strengthen a S/T bearish threat and signal scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, resistance to watch is 5522.00, the Aug 22 high. A break of it would resume the uptrend. A bull cycle in S&P E-Minis remains intact and the contract traded to a fresh cycle high last week. This maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position too, highlighting a clear uptrend and positive market sentiment. Attention is on 6543.75, a Fibonacci projection. Support to watch lies at 6332.30, the 50-day EMA. The latest pullback appears corrective. 

• Japan's NIKKEI closed higher by 121.7 pts or +0.29% at 42310.49 and the TOPIX ended 18.69 pts higher or +0.61% at 3081.88.
• Elsewhere, in China the SHANGHAI closed lower by 17.398 pts or -0.45% at 3858.133 and the HANG SENG ended 120.87 pts lower or -0.47% at 25496.55.
• Across Europe, Germany's DAX trades lower by 235.44 pts or -0.98% at 23802.08, FTSE 100 lower by 37.18 pts or -0.4% at 9159.32, CAC 40 up 7.7 pts or +0.1% at 7715.6 and Euro Stoxx 50 down 22.27 pts or -0.41% at 5344.81.
• Dow Jones mini down 169 pts or -0.37% at 45432, S&P 500 mini down 29 pts or -0.45% at 6443.75, NASDAQ mini down 138.75 pts or -0.59% at 23323.75.

• MNI: EUROZONE AUG FLASH HICP +2.1% Y/Y, +0.2% M/M
• EUROZONE AUG FLASH CORE HICP +2.3% Y/Y, +0.3% M/M
• EUROZONE AUG FLASH SERVICES HICP +3.1% Y/Y, +0.3% M/M

• A combination of drivers have propelled USDJPY to a fresh one month high of 148.79 this morning. The initial impetus for the squeeze higher came from Bank of Japan Deputy Governor Ryozo Himino, who gave no guidance on the timing or pace of potential rate hikes, providing little confidence to yen longs.
• The dynamic of widening yield differentials underpinning the USDJPY rally has then been exacerbated by a relief rally for JGB futures following a very solid 10-year auction (highest bid-to-cover since 2023) and a subsequent pop higher for core yields.
• USDJPY demand towards 146.00 has been pretty solid since mid-July and through August, keeping us for the most part in a 146.00-149.00 range, with today’s move placing the pair towards the upper end of this range.
• Political uncertainty has also played its part in the yen sell-off early Tuesday, as a flurry of resignations from senior leadership positions within the governing LDP have followed what is reported to have been a raucous internal party meeting. It remains to be seen whether this proves a sufficient sacrifice to keep PM Shigeru Ishiba in office.
• On the topside, 149.12 is the next resistance (61.8% of the Aug 1 - 14 bear leg). However, should momentum gather speed, investors will be focused on 149.81 and 150.92, the August 01 high and a key resistance.