MNI: FED CHAIR JEROME POWELL SCHEDULED TO SPEAK JULY 2
- MNI: FED CHAIR JEROME POWELL SCHEDULED TO SPEAK JULY 2
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USDCAD TECHS: Support Is Intact But Remains Exposed
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3748/85 61.8% of the Apr 16 - Mar 16 bear leg / High Apr 30
- PRICE: 1.3636 @ 16:43 BST May 28
- SUP 1: 1.3590 Low May 16 and the bear trigger
- SUP 2: 1.3547 Low Apr 9
- SUP 3: 1.3512 50.0% retracement of the Dec 27 - Apr 16 bull cycle
- SUP 4: 1.3478 Low Apr 4
A bullish trend condition in USDCAD remains intact and for now a short-term pullback is considered corrective. Key supports at 1.3642, the 50-day EMA, and 1.3610, the May 3 low, have recently been pierced. A clear break of both levels is required to threaten the bullish theme and this would signal scope for a deeper retracement. For bulls, a resumption of gains would refocus attention on the bull trigger at 1.3846, the Apr 16 high.
US TSYS: Sizeable Bear Steepening Amidst Consumer Confidence Beat and Heavy Supply
- Treasuries have seen a sizeable bear steepening today, driven by stronger than expected Conference Board consumer confidence (despite a weak labor differential) and then more notably sizeable tails for double 2Y and 5Y auctions with their particularly low bid-to-cover metrics (lowest since Nov’21 and Feb’21 respectively).
- Kashkari (non-voter) earlier saying he doesn’t think anyone has taken rate increases off the table, albeit with him seeing quite low odds of a hike, had little immediate impact. Similarly, WTI gains of 3.2% have done little to stop the steepening on the day.
- Cash yields sit between +2.4bp (2s) and +8.6bps (30s) on the day, with 2s10s at -43bps for a firm lift from Friday’s YtD low of -48.3bps.
- 10Y yields have easily cleared 4.50% and hold around 4.54% for now, at highs since the May 3 payrolls report.
- 2Y yields meanwhile at 4.972% have already cleared pre-payrolls levels but could see more resistance to hit 5% having last briefly breached that handle on Apr 30 for one day before the FOMC May 1 announcement.
- TYM4 cleared a key support at 108-15 (May 14 low) with the 5Y auction before hitting a low of 108-08. Next support is seen at 108-06 (May 3 low) after which lies 108-06 (May 2 low).
- Fed Funds implied rates have lifted to show just 19bp of cumulative cuts priced for Nov and 32bp for Dec.
- Tomorrow sees the Beige Book but greater focus is likely on continued supply with $44bn of 7Y supply on the docket after a combined $139bn over 2Y and 5Y notes today.
- Data focus lies on second estimates of Q1 national accounts Thu before the April PCE report on Fri.
AUDUSD TECHS: Trend Set-Up Remains Bullish
- RES 4: 0.6771 High Jan 3
- RES 3: 0.6751 76.4% retracement of the Dec 28 - Apr 19 bear leg
- RES 2: 0.6729 High Jan 12
- RES 1: 0.6714 High May 16 and the bull trigger
- PRICE: 0.6660 @ 16:38 BST May 28
- SUP 1: 0.6592 Low May 24
- SUP 2: 0.6581 50-day EMA
- SUP 3: 0.6558 Low May 8
- SUP 4: 0.6465/6407 Low May 1 / Low Apr 22
The recent down in AUDUSD appears to have been a correction and a bullish cycle that started Apr 19 remains in play. The pair has recently breached a key short-term hurdle at 0.6668, the Mar 8 high. The break strengthens a bullish theme and a resumption of gains would open 0.6751, a Fibonacci retracement. On the downside, support to watch lies at 0.6581, the 50-day EMA.
