EU-BILL AUCTION PREVIEW: On offer next week

Taylor is done talking for now on Bloomberg and the text of his Sintra speech is here  (which was due at 11:30BST / 12:30CET).

• In this speech he reiterates the 5 cuts in 2025 that he said in the Bloomberg TV interview (mentioned above): "After some shocks and noise clouded my view of the economy and global developments in the first quarter, my reading of the deteriorating outlook suggested to me that we needed to be on a lower rate path, needing five cuts in 2025 rather than the market-implied quarterly pace of four."
• On the neutral rate Taylor says "I estimate the UK neutral real rate to be about 0.75 to 1 percent, putting the neutral nominal rate at around 2.75 to 3 percent"
• "Getting there, under our baseline scenario without further shocks, would take more time and a continued removal of restrictiveness in 2026 and 2027 as the economy returns to long-run real and nominal equilibrium."
• We note that estimate of 2.75-3.00% for the neutral rate is much lower than said by other MPC members recently.

• In FX, the trend needle in EURUSD continues to point north and the pair is holding on to its latest gains. The breach last week of 1.1631, the Jun 12 high and a bull trigger, confirmed a resumption of the uptrend. The 1.1800 handle has been pierced, sights are on 1.1851, the Sep 10 2021 high. Key short-term support to watch lies at 1.1578, the 20-day EMA. A clear break of this average is required to signal scope for a deeper retracement.
• A bull cycle in GBPUSD remains in play and a fresh cycle high Tuesday reinforces bullish conditions. This maintains the price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Sights are on 1.3800 next. Initial support to watch lies at 1.3586, the 20-day EMA. A break would signal scope for a corrective pullback.
• A bear threat in USDJPY remains intact and Tuesday’s sell-off reinforces this theme. The Jun 23 shooting star candle formation highlighted a reversal of the recent recovery and this signal remains in play. Note too that price has traded through the 20- and 50-day EMAs. A clear break of the EMAs strengthens a bearish threat and opens 142.12, the May 27 low and a key short-term support. Initial resistance is at 144.97, the 50-day EMA.

• "We're in a different place than we were a year ago, so that has to be taken into consideration."
• "The broader context here is that we're transitioning to a different regime in the long run, with liquidity, come on, through repo, rather than through outright asset purchases, and that should be a gradual transition, and that's what we have in mind."
• "I think that destination hasn't changed, but just as we said a moment ago, with the rate decision not being on a preset path, I don't think one should think of the Qt being on a preset path either. So it's very much a live decision, and I think we have to look, look at the context liquidity in the market.