USDCAD TECHS: Path Of Least Resistance Remains Up
- RES 4: 1.4070 1.236 proj of the Sep 19 - Oct 5 - Oct 10 price swing
- RES 3: 1.4031 2.0% 10-dma envelope
- RES 2: 1.3977 High Oct 13 2022 and a major resistance
- RES 1: 1.3892 High Oct 31
- PRICE: 1.3886 @ 17:14 GMT Oct 31
- SUP 1: 1.3790 Low Oct 26
- SUP 2: 1.3711/3615 20- and 50-day EMA values
- SUP 3: 1.3477 76.4% retracement of the Sep 19 - Oct 5 rally
- SUP 4: 1.3417 Low Sep 29
The USDCAD trend needle continues to point north. Sights are on 1.3977, the Oct 13 2022 high. Last week’s break of resistance at the Mar 10 high of 1.3862, strengthens the bullish condition. Moving average studies are in a bull-mode position too, highlighting an uptrend and reflecting positive market sentiment. On the downside, initial firm support is seen at 1.3711, the 20-day EMA. A pullback would be considered corrective.
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US TSYS: Stopgap Funding Bill Passed, US Govt Shutdown Averted, For Now
- Markets are likely to open on a positive tone after Congress passed a stopgap funding bill Saturday evening. The Senate voted to pass the bill on a 88 to 9 margin after the House had voted 335-91.
- Later in the evening President Biden signed the H.R. 5860 bill, "which provides fiscal year appropriations to Federal agencies through November 17, 2023, for continuing projects of the Federal Government and extends several expiring authorities." LINK
- US Treasury Secretary Yellen issued a statement applauding the bipartisan measure to avoid a shutdown.
USDCAD TECHS: Bear Trend Conditions Remain Intact
- RES 4: 1.3805 High Mar 24
- RES 3: 1.3705 Trendline resistance drawn from the Oct 13 2022 high
- RES 2: 1.3593/95 High Sep 12 / 7 and key resistance
- RES 1: 1.3543 High Sep 27
- PRICE: 1.3527 @ 15:53 BST Sep 29
- SUP 1: 1.3417/3381 Low Sep 29 / 19
- SUP 2: 1.3323 61.8% retracement of the Jul 14 - Sep 7 bull leg
- SUP 3: 1.3266 Low Aug 2
- SUP 4: 1.3235 76.4% retracement of the Jul 14 - Sep 7 bull leg
USDCAD remains in a corrective cycle. The short-term outlook is unchanged and a downtrend remains intact - the recent breach of 1.3490, the Sep 1 low, and the move below the 50-day EMA, reinforced a bearish theme. A resumption of weakness would open 1.3323 next, a Fibonacci retracement. Next resistance to watch is 1.3593, the Sep 12 high. Key resistance is at 1.3695, the Sep 7 high.
US TSYS: Tsys Don't Fear the Shutdown, Nor Quarter End For That Matter
- Support for Treasury futures continued to ebb in the second half, bonds steady briefly before climbing again on quarter/month end positioning. Tsys started to consolidate late morning - largely knock-on effect as EGB's pared gains ahead the weekend. Moves not related to impending US Govt shutdown expected to start Sunday.
- Current Dec'23 10Y futures +6 at 108-01.5 vs. 107-26 low, well above initial technical support of 107-05+ 1.382 proj of the Jul 18 - Aug 4 - Aug 10 price swing. Dec'23 30Y futures tapped steady after the bell but rebounded +7 to 113-23 on quarter/month-end extension trade.
- Curves steeper with the short end outperforming, 3m10Y +1.687 at -87.756, 2Y10Y +2.326 at -46.222.
- Treasury futures had extended highs following a raft of in-line data this morning that pointed to cooling inflation metrics heading into the fall.
- Fast two-way trade reported after initial data came out largely in-line:
- Personal Income (0.4% vs. 0.4% est)
- Personal Spending (0.4% vs. 0.5% est, prior up-revised to 0.09%)
- Real Personal Spending (0.1% vs. 0.0% est)
- PCE Deflator MoM (0.4% vs. 0.5% est), YoY (3.5% vs. 3.5% est)
- PCE Core Deflator MoM (0.1% vs. 0.2% est), YoY (3.9% vs. 3.9% est)
- Little observable reaction to lower than est. Chicago PMI (44.1 vs. 47.6 est, 48.7 prior) and after slightly higher UofM consumer sentiment at 68.1 vs. 67.7 est, 1- and 5Y inflation expectations in-line with expectations of 3.2% and 2.8% respectively.
