US TSYS: Markets Cling to Narrow Ranges Ahead Friday January Employment Data
- Treasuries hold to lower, narrow ranges late Thursday, scaling back some of the midweek rally that saw Mar'25 10Y futures climb to the highest level since prior to the December 18 FOMC announcement. Markets held ranges amid moderate two-way position squaring heading into Friday's headline employment data for January that is expected to slow to 170-180k from December’s strong 256k.
- Little react to BOE cutting rates by expected 25bp but raising forward inflation guidance sharply. Initial jobless claims were higher than expected at 219k (sa, cons 213k) in the week to Feb 1 after an upward revised 208k (initial 207k). Unit labor costs rose by less than had been expected in Q4 2024, with the 3.0% Q/Q SA annualized rise (3.4% survey).
- After the bell, Mar'25 10Y futures trade -6 at 109-18 (109-14 low/109-25 high), well inside technicals: resistance above at 109-30 (61.8% retracement of the Dec 6 - Jan 13 bear leg); support below at 108-20.5 (Low Feb 4). 10Y yld at 4.4382% +.0201.
- The Greenback looks to finish near steady after climbing off yesterday's lows earlier, the BBG US$ index at 1297.58 at the bell vs. 1302.43 high. Post-BOE, the GBPUSD fell sharply back below the 1.24 handle.
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USDCAD TECHS: Bull Flag
- RES 4: 1.4674 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4353 @ 20:05 GMT Jan 7
- SUP 1: 1.4322/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4155 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD traded lower Monday. The trend set-up remains bullish and the move down is considered corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4322, the 20-day EMA, has been pierced. A clear break of the EMA would open 1.4155, the 50-day EMA.
US TSYS: Ylds Climb After Strong JOLTS Jobs, ISM Prices Paid Jump
- Treasuries have drifted sideways since establishing lows after this morning's data: JOLTS report saw surprisingly elevated job openings in November but the quits rate reversed a surprise increase from back in October. Job openings 8090k (cons 7740k) in Nov after an upward revised 7,839k (initial 7,744k) in Oct.
- Headline ISM index strengthened to 54.1, a little higher than the 53.5 expected (52.1 prior), with New Orders (54.2, 53.7 prior) and Employment (51.4, 51.5 prior) exactly matching survey expectations. But Prices Paid soared to 64.4 (57.5 expected, 58.2 prior), jumping by the most since January to the highest level in 22 months.
- The Mar'25 10Y contract slipped below Dec 26 low to 108-01.5 low (-15.5), 10Y yld climbing to 4.6972% high. Though Tsy curves climbed to new three year highs (2s10s 39.618), projected rate cuts for 2025 continued to recede with June 25 no longer fully pricing a 25bp rate cut. Current lvls this morning levels (*) as follows: Jan'25 at -1.2bp (-2.3bp), Mar'25 -10.2bp (-10.9bp), May'25 -14.7bp (-16.3bp), Jun'25 -23.2bp (-24.2bp).
- Reminder, much of Thursday's data has been moved to Wednesday (Wholesale Sales, Weekly Jobless Claims) as well as the 30Y Bond auction re-open to avoid conflicts with Thursday's Federal Holiday/day of Mourning for former President Carter. The CME Group FI trade closes at 1315ET Thursday. Thursday still includes Challenger Job cuts at 0730ET, Tsy 4- & 8W bill auctions at 1130ET, and several scheduled Fed speakers through the day.
AUDUSD TECHS: Tests Resistance At The 20-Day EMA
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6400 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6273/0.6302 20-day EMA / High Jan 6
- PRICE: 0.6239 @ 20:02 GMT Jan 7
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
Despite Monday’s gains, a bearish trend condition in AUDUSD remains intact. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6276, 20-day EMA. It has been pierced. The 50-day EMA is at 0.6400.
