JGBS: Modest Bear-Steepener, Narrow Ranges With The US Markets Out

JGB futures are holding weaker, -16 compared to settlement levels, on a data-light local session.

• Bloomberg - "The 10-year auction earlier this week drew strong demand, but attention now shifts to Thursday's 30-year sale -- the true litmus test for investor appetite. Ultra-long bonds remain the market's weak point, and their performance will determine whether recent volatility persists."
• MNI POLICY: Bank of Japan officials will closely watch the upcoming June Tankan survey, due July 1, for signs of resilience in non-manufacturers' sentiment and upward revisions to major firms' capital investment plans, which would support its baseline view for a gradual rate-hike path, MNI understands.
• Cash US tsys are little changed in today's Asia-Pac session after yesterday's modest losses. Today’s US calendar will see ADP, S&P Services PMI, ISM Services Index and Fed Beige Book data.
• Cash JGBs are flat to 3bps cheaper across benchmarks, with a steeper curve. The benchmark 30-year yield is 1.1bps higher at 2.955% ahead of tomorrow’s supply.
• Swap rates are flat to 3bps higher.
• Tomorrow, the local calendar will see Cash Earnings and International Investment Flow data alongside 30-year supply.

The BBDXY has had a range of 1211.72 - 1214.14 in the Asia-Pac session, it is currently trading around 1214. "NATO is pushing European members to expand ground-based air-defense capabilities fivefold in response to the threat of Russian aggression, people familiar said. Trump will attend the alliance’s summit in The Hague later this month, the White House said.”(BBG)

• EUR/USD -  Asian range 1.1366 - 1.1393, Asia is currently trading 1.1370. EUR has drifted sideways during the Asian session. Dips should continue to find support, the demand back towards 1.1200 proved to be solid last week.
• GBP/USD - Asian range 1.3513 - 1.3545, Asia is currently dealing around 1.3515. The GBP is attempting another run higher but is struggling to gain any momentum on a 1.3500 handle. Look for an opportunity to buy again back towards the 13300/3400 area if seen.
• USD/CNH - Asian range 7.1829 - 7.1944, the USD/CNY fix printed 7.1886. Asia is currently dealing around 7.1915. Sellers should be around on bounces while price holds below the 7.2500 area. 
• Cross asset : SPX -0.07%, Gold $3356, US 10-Year 4.44%, BBDXY 1214, Crude oil $63.13

• Data/Events : Spain Industrial Production & Services PMI, Italy Serv PMI, France Serv PMI, Germ Serv PMI, EC Serv PMI

  Fig 1: GBP/USD Spot Daily Chart

  

  Source: MNI - Market News/Bloomberg

• RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - Mar 27 price swing
• RES 3: 1.1608 High Nov 9 2021
• RES 2: 1.1573 High Apr 21 and the bull trigger
• RES 1: 1.1455 High Jun 03
• PRICE: 1.1369 @ 06:03 BST Jun 4
• SUP 1: 1.1313 20-day EMA
• SUP 2: 1.1190/1.1065 50-day EMA and a pivot level / Low May 12
• SUP 3: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
• SUP 4: 1.0943 Low Apr 10

A bullish theme in EURUSD remains intact despite yesterday’s pullback. The recent breach of  1.1419, the May 26 high, confirms a resumption of the trend and opens 1.1573, the Apr 21 high and bull trigger. Moving average studies remain in a bull-mode position, highlighting a clear uptrend. Support to watch lies at 1.1190, the 50-day EMA. A clear break of this average would undermine the bull theme and signal scope for a deeper retracement.