USDCAD TECHS: Pierces Support
- RES 4: 1.3751 High Nov 4
- RES 3: 1.3705 Dec 16 and the bull trigger
- RES 2: 1.3665 High Jan 6
- RES 1: 1.3446/3521 20-day EMA / High Jan 19
- PRICE: 1.3351 @ 16:53 GMT Jan 26
- SUP 1: 1.3304 Low Jan 26
- SUP 2: 1.3226 Low Nov 15 and bear trigger
- SUP 3: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
- SUP 4: 1.3131 0.764 proj of the Oct 13 - Nov 15 - Dec 16 price swing
USDCAD bearish trend conditions have been reinforced. The move lower today has resulted in a print below initial support at 1.3322, the Jan 13 low. A clear break of this level would signal scope for 1.3226, the Nov 13 low and the bear trigger. Moving average studies are in a bear mode position, highlighting a downtrend. On the upside, the pair needs to clear 1.3521 to signal a reversal.
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US TSYS: Rates Hold Lower, Narrow Band
Early Tuesday risk sentiment after China said it will end quarantine requirements for inbound travelers in early January, gradually evaporated as Tsys continued to drift lower on very light volumes by the close (TYH3<585k), while equities reversed early gains, Dow shares outperformed mildly weaker SPX and Nasdaq shares ahead the FI close. Trade volumes will hopefully improve Wednesday as London returns from extended Christmas holiday.
- Carry-over weakness w/ US$ index lowest levels in six months, extended losses from last week when data showed that US core PCE prices, the central bank’s preferred inflation gauge, fell to a four-month low of 4.7% YoY in Nov.
- Little react after $42B 2Y note auction (91282CGD7) stops through: 4.373% high yield vs. 4.390% WI; 2.71x bid-to-cover vs. 2.64x prior. Indirect take-up climbs to 62.22% vs. 56.98% last month, direct take-up 18.71% vs. 20.62%. primary dealer take-up 19.07% vs. 22.39%.
- Focus turns to Wed's data: Richmond Fed Mfg Index (-9, -10) and Pending Home Sales MoM (-4.6%, -1.2%); YoY (-36.7%, --) at 1000ET
- US Tsy auctions: $22B 2Y FRN Note auction re-open (91282CFS5) at 1130ET, $43B 5Y Note auction (91282 CGC9) at 1300ET
US TSY OPTIONS: 5Y Put Spd Buyer
- +12,000 FVG 108/108.5 put spds, 17.5 ref 108-00.75
US: Tsy Dept: Corporate Alternative Minimum Tax; Stock Buybacks Tax
The US Tsy Dept just issued initial guidance on two key tax provisions of the Inflation Reduction Act, the Corporate Alternative Minimum Tax and the excise tax on stock buybacks.
- The Inflation Reduction Act created a 15% alternative minimum tax on large companies earning an average of more than $1 billion annually beginning in 2023. The initial high-level guidance issued by Treasury today clarifies which companies the tax applies to and how the alternative minimum tax is calculated.
- The Inflation Reduction Act also created a new annual excise tax that applies to repurchases of a publicly traded corporation’s stock that take place after December 31, 2022. The initial guidance issued by Treasury today addresses the types of transactions subject to the tax, how the tax is calculated, and basic rules to prevent the avoidance of the tax.
