BOC: MNI BoC Review-Oct 2025: Pause Seen With Rates “About Right”

• RES 4: 114-10   High Apr 7 (cont.)
• RES 3: 114-00   Round number resistance
• RES 2: 113-12/29 High Sep 18 / High Sep 11 and the bull trigger 
• RES 1: 112-24/113-00 20-day EMA / High Sep 24 
• PRICE:‌‌ 112-17+ @ 16:50 BST Sep 29
• SUP 1: 112-01   50.0% retracement of the Jul 15 - Sep 11 bull phase   
• SUP 2: 111-26   Low Aug 26
• SUP 3: 111-13+ Low Aug 18 and a key support  
• SUP 4: 111-01+ 76.4% retracement of the Jul 15 - Sep 11 bull phase  

Treasury futures traded lower last week and remain in retracement mode. Thursday’s sell-off has resulted in a print below the 50-day EMA, at 112-10. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. Initial firm resistance to watch is 113-00, the Sep 24 high.

• EUR/USD: Oct01 $1.1600-10(E3.3bln), $1.1700-10(E2.1bln), $1.1750(E1.3bln), $1.1791-00(E1.7bln), $1.1900(E1.3bln); Oct02 $1.1695-00(E1.5bln), $1.1750(E1.1bln), $1.1785-90(E2.5bln); Oct03 $1.1700(E1.1bln), $1.1845-55(E1.9bln), $1.1875(E1.2bln)
• USD/JPY: Oct02 Y147.95-00($1.4bln), Y149.50($1.0bln)
• AUD/USD: Oct01 $0.6600-10(A$1.1bln), $0.6700(A$1.6bln); Oct02 $0.6600(A$1.7bln); Oct03 $0.6600(A$1.5bln)

Jake Sherman at Punchbowl News reporting on X that House Speaker Mike Johnson (R-LA) told Republican representatives in a conference call that he intends to bring the House of Representatives back from recess next week. Keeping the lower chamber shuttered this week suggests that the only route out of a government shutdown on October 1 is a capitulation from Senate Minority Leader Chuck Schumer (D-NY) or an unlikely 'handshake' deal with President Donald Trump and Republican leaders on an 'Obamacare' subsidy vote. 

• Sherman notes that Johnson said that he wants Republicans to be 'unified'. On the call, he expressed 'confidence' about the GOP's position -- they passed a clean CR.
• On the conference call, lawmakers were told that House and Senate GOP leadership will have a joint news conference Wednesday morning, the first morning of a potential shutdown. Johnson also advised Republican lawmakers to "eschew political events during a shutdown," likely offsetting the risk of negative publicity.
• Although there have yet to be any reported comments from Schumer, the most important figure in the shutdown standoff, Polymarket recorded a spike in the implied probability of a shutdown following Johnson's comments. 

Figure 1: Government Shutdown on October 1

Source: Polymarket