STIR: Market Steadies Around 10bp Of BoE Cuts Through Dec
SONIA futures flat to 1.5bp firmer, with Tsy futures still trading above levels seen at the time of yesterday’s settlement, although a recovery from lows in equity futures limits any further upside in core global FI.
- SFIZ5 & Z6 continue to operate above multi-month lows, after the recent run of hawkish pressure stemming from domestic data and the hawkish BoE rate cut delivered earlier this month.
- Meanwhile, BoE-dated OIS has stabilised around 10bp of easing through year-end, with less than 5bp of cuts showing through the November MPC.
- The UK calendar remains thin today, which will leave the market susceptible to headline flow and cross-market moves.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Sep-25 | 3.977 | +1.0 |
Nov-25 | 3.920 | -4.7 |
Dec-25 | 3.871 | -9.6 |
Feb-26 | 3.776 | -19.1 |
Mar-26 | 3.737 | -23.1 |
Apr-26 | 3.670 | -29.7 |
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USD: Broader spillovers into the USD strength
- Some broader spillovers into the Dollar, a fresh high against the AUD, CHF, ZAR, PLN, SEK, SGD, MXN, CZK, CAD, GBP.
- The EUR is now testing that just noted Immediate support area, the Currency is under renewed pressure, looking at CME Exchange flow, the best selling volume of the early day has gone through in the past couple of minutes.
- The 1.1557/1.1560 area is holding for now, but a clear break through the latter, would see market Participants eyeing 1.1500 next.
USD: The EUR is Under renewed heavy pressure
- The Dollar was flat overnight going into the European session, only the Yen was up 0.23%, although if you look at the past 4 sessions, it will show that the {r3} USDJPY rallied 285 pips from last Thursday low to Today's overnight high.
- While some of the bid in the Greenback has been attributed on Trade Deals, as well as some positioning into the FOMC, with Market Participants looking for the Fed to keep its Hawkish stance, many desks have been somewhat surprised by the strength of the Dollar move, especially Yesterday.
- Looking at the past 5 days, the EUR is the worst performer, down 1.45% and the Currency is already seeing some early selling interest albeit in very small for now.
- Yesterday's range was one of its widest since early April for the EURUSD, with the most traded Pair in the World falling nearly 200 pips, as the Street reassessed the actual details of the EU-US trade deal.
- Next immediate support in the EUR is at 1.1560/1.1557.
AUDUSD TECHS: Trading Ahead Of Support At The 50-Day EMA
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
- RES 1: 0.6625 High Jul 24
- PRICE: 0.6522 @ 07:31 BST Jul 29
- SUP 1: 0.6505 50-day EMA
- SUP 2: 0.6455 Low Jul 17
- SUP 3: 0.6373 Low Jun 23 and a bear trigger
- SUP 4: 0.6357 Low May 12
Recent gains in AUDUSD reinforce bullish conditions and the latest pullback is considered corrective. Support to watch is at the 50-day EMA, at 0.6505. A clear break of this EMA would highlight a stronger reversal. For bulls, a resumption of gains would focus attention on 0.6625, the Jul 24 high. Clearance of this level would resume the uptrend and open the next objective at 0.6688, the Nov 7’ 24 high.
