USDJPY TECHS: Northbound
- RES 4: 140.00 Psychological round number
- RES 3: 139.48 1.00 proj of the Jun 16 - 22 - 23
- RES 2: 138.56 1.618 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 1: 137.75/138.00 High Jul 8 / Round number resistance
- PRICE: 137.01 @ 06:57 BST Jul 13
- SUP 1: 135.37/134.27 20-day EMA / Low Jun 23
- SUP 2: 133.30 Bull channel base from the Mar 4 low
- SUP 3: 131.50 Low Jun 16 and a key support
- SUP 4: 130.00 Round number support
USDJPY remains bullish. This week’s fresh cycle high confirms a resumption of the primary uptrend and signals scope for an extension higher. The move higher also highlights the fact that corrections remain shallow, reinforcing underlying bullish conditions. The focus is on the 138.00 handle and 138.56 further out, a Fibonacci projection. Firm short-term support lies at 134.27, the Jun 23 low.
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EURJPY TECHS: Pullback Considered Corrective
- RES 4: 146.74 High Dec 30 2014
- RES 3: 145.58 High Dec 31 2014
- RES 2: 145.00 Round number resistance
- RES 1: 144.25/58 High Jun 8 / 0.764 proj of Mar 7 - 28 - Apr 5 swing
- PRICE: 141.50 @ 06:55 BST Jun 13
- SUP 1: 140.80 Low Jun 10
- SUP 2: 140.00 High Apr 21 and recent breakout level
- SUP 3: 139.15 20-day EMA
- SUP 4: 138.32 High May 9
EURJPY remains below last week’s high of 144.25 on Jun 8. The recent pullback is considered corrective. The latest rally above 140.00 confirmed a resumption of the uptrend that started Mar 7. Moving average studies also point north, reinforcing current conditions and signalling scope for a continuation higher. The focus is on 144.58 next, a Fibonacci projection and 145.00 is also within range. Firm short-term support is seen at 140.00.
UK DATA: April activity data due at 7:00BST
- A big week for the UK kicks off this morning with the release of the April activity and trade data.
- Consensus looks for UK monthly GDP to have inched higher in April, rising 0.1% and reversing the 0.1% decline seen in March. However, on a 3m/3m basis, growth is expected to slow to 0.4% from 0.8% the seen in March.
- The service sector is expected to mirror the wider economy, edging higher from the modest contraction seen in the the previous set of data. IP and manufacturing are expected to see slightly bigger rises after their bigger falls in March.
- At writing, markets were pricing in around 37bp for this week's MPC meeting, around a 45% probability of a 50bp hike this week (with 25bp fully priced in). We think tomorrow's labour market data has more market-moving potential but do see some two-way risk to today's print for UK markets, too. A stronger print may be seen by the market to embolden some MPC members who may be considering a 50bp hike while a weaker print would highlight concerns to keep raising rates more gradually.
- As with other recent UK data prints, we would expect to see an initial reaction in the pound on a surprise when the data is first released, but the main move to happen when SONIA futures open at 7:30BST.
EUROZONE ISSUANCE: EGB Supply For W/C June 13, 2022 (2/2)
- On Thursday, Spain will look to reopen the on-the-run 5-year Bono, an off-the-run Obli with an 8-year residual maturity and the on-the-run 15-year Obli: the 0% Jan-27 Bono (ISIN: ES0000012J15), the 1.95% Jul-30 Obli (ISIN: ES00000127A2) and the 0.85% Jul-37 Obli (ISIN: ES0000012I24). The target range will be announced on this afternoon.
- Also Thursday, France will look to sell E10.5-11.5bln of MT OATs: the 0% Feb-25 OAT (ISIN: FR0014007TY9), the 0.75% Feb-28 OAT (ISIN: FR001400AIN5), the 0.75% Nov-28 OAT (ISIN: FR0013341682) and the 0.50% May-29 OAT (ISIN: FR0013407236).
- France will return later that day to sell E1.0-1.5bln of linkers. On offer will be the 1.85% Jul-27 OATei (ISIN: FR0011008705), the 0.10% Mar-36 OATi (ISIN: FR0013524014) and the 1.80% Jul-40 OATei (ISIN: FR0010447367).
NET NOMINAL FLOWS: A E14.1bln Italian CCT-eu is the only redemption due this week while coupon payments will total E0.5bln. This leaves estimated net flows for the week at positive E21.1bln (from the negative E3.1bln last week).
For a calendar of all announced EGB/EU/ESM/EFSF auctions see the MNI EZ/UK Bond Supply Calendar here.
