NATGAS: Mid-Day Gas Summary: TTF Rises

• USDCAD (+0.15%) is exhibiting a relatively tight range on Tuesday, despite the more constructive tone for the greenback. Although off recent cycle lows, USDCAD posted its lowest daily close since October on Monday, keeping the CAD’s recent resilience in focus as we approach this week’s BOC rate decision.
• We believe that better-than-expected GDP and a pickup in core inflation should tilt the balance toward a hold tomorrow. MNI’s full preview is here: https://mni.marketnews.com/3HqClXT
• Price action backs up the prevailing bear trend for USDCAD evidenced by the 20-day EMA capping the pair’s gains well last week. Sights are on 1.3643 next, the Oct 9 low/Sep high and below here, attention will be on 1.3579, a Fibonacci projection.
• The break-even on an overnight straddle sits at +/- 50 pips, suggesting markets see little risk of a significant breakout over the BOC, and place greater attention on Friday’s US employment data.
• Scotiabank points to CPI expectations remaining elevated, tariff related risks and the fact the markets aren’t pressuring the BOC as bolstering the case for a hold. Goldman Sachs think CAD could benefit from a slightly more hawkish BOC and believe better growth will be a larger positive impulse for the currency in the medium-term.

• The BTP/Bund continues to find some support at the September 2021 low, situated circa ~97.7bps.
• For now the spread sits just a small 0.4bp wider but at 97.6bps.
• Further tightening bias would still target the Psychological 90.00bps level next, printed a 90.4bps low in 2021, its lowest since mid March 2015.
• It is Worth keeping an eye on how we progress from here.

(Chart source: MNI/Bloomberg).

• In the FI space, a bullish theme in Bund futures remains intact and the contract is trading at its recent highs. The latest recovery suggests the move down between Apr 22 - May 15, has been a correction. A continuation higher would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Key short-term support to watch is 129.13, the May 15 low. First support lies at 130.39, the May 29 low.
• Gilt futures have recovered from their recent lows and strengthened this week, however, gains are still considered corrective and this has allowed a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.