POWER: Nordic Foward Curve Could Trade in Green on TTF, German Power
The Nordic forward curve could be supported amid sharp gains in TTF and German power, with a downward revision of Norway's hydro balance towards the end of the month. However, Sweden’s balance is up marginally on the day, with temperatures in the Nordics still expected to be well above the norm until 25 January – which may cap gains.
- Nordic Base Power FEB 25 closed down 4.5% at 33.15 EUR/MWh on 10 Jan.
- France Base Power FEB 25 up 3.7% at 94.85 EUR/MWh
- Germany Base Power FEB 25 up 4.4% at 100.24 EUR/MWh
- EUA DEC 25 up 1.6% at 76.04 EUR/MT
- TTF Gas FEB 25 up 4.7% at 47.105 EUR/MWh
- The Norwegian hydro balance is expected lower over 14-27 Jan, with downward revisions seen as high as around 400GWh from previous forecasts. The balance anticipated at +11.59TWh on 27 Jan compared to +11.96TWh previously estimated.
- But Sweden’s hydro balance is expected at +4.88TWh on 27 Jan compared to +4.85TWh in the previous estimate.
- And rainfall in the Nordics over 14-23 Jan will see below-normal precipitation – which could decrease flows into the reservoirs, with precipitation only flipping slightly above over 24-25 Jan.
- But average temperatures in the region will be between -2.4C and 3.71C over 14-24 Jan compared to the norm of around -2C.
- Closer in, Norwegian wind is forecasted at 1.87GW on 14 Jan, or a 36% load factor down from today's 2.28GW forecast, which could place upward pressure on delivery.
- Nordic nuclear capacity was at 88% capacity on Monday morning, down from 89% on Friday, according to Bloomberg. However, 10 of the 11 units are still online.
- The 1.17GW Forsmark 3 is still expected to return on 27 January.
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
