USDCAD TECHS: Pivot Resistance Remains Intact

Cash Treasuries weakened Wednesday after three flat/positive sessions, with some light bear steepening in the cash curve.

• Treasury-negative headlines/macro developments were actually limited (a long-end Japanese bond auction went softly overnight), with yields moving lower in early trade before pushing sharply higher in late morning.
• At that point Tsys, found a bid as 30Ys touched 5.00% with 10Ys just under 4.50%. Overall, trade was mostly within Wednesday's ranges.
• The session featured a very solid 5Y Note auction, which saw a 0.4bp trade-through and a record-high takedown for 5s by indirect bidders (and one of the lowest-ever primary dealer takeups), helping yields consolidate into the close.
• The May FOMC meeting minutes cast a lightly hawkish tone in MNI's view, with little to no emphasis on the possibility of tariff-driven inflation proving to be a one-off shock. However the accounts were seen as relatively stale given developments in the last 3 weeks, and met with limited market reaction.
• In data, regional Fed surveys (Dallas services, Richmond manufacturing and services) were mixed but generally saw some stabilization in May, while Redbook retail sales continued to indicate resilient consumer activity into late May.
• Latest cash levels: 2-Yr yield is up 0.9bps at 3.9901%, 5-Yr is up 3bps at 4.0635%, 10-Yr is up 3.2bps at 4.4753%, and 30-Yr is up 2.1bps at 4.9717%.
• Note that with the Jun/Sep futures roll all but complete (all contracts 90+% through), September becomes the front contract.
• Thursday's schedule includes the 2nd reading of Q1 GDP alongside weekly jobless claims, with appearances by Fed's Barkin, Goolsbee. Kugler, and Daly.

• RES 4: 0.6603 High Nov 11 ‘24  
• RES 3: 0.6582 High Nov 12 ‘24
• RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 1: 0.6537 High May 26  
• PRICE: 0.6416 @ 16:44 BST May 28
• SUP 1: 0.6378 2.0% Lower 10-day Bollinger Band
• SUP 2: 0.6376/57 50-day EMA / Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

AUDUSD trend signals remain bullish and the latest pullback is considered corrective. The pair has cleared a key short-term resistance at 0.6515, the May 7 high. This confirms a triangle breakout and marks a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement. Key support lies at 0.6379, the 50-day EMA. A clear break of this average is required to signal a potential short-term reversal.  

Wednesday's US rates/bond options flow included:

• SFRM5 96.00/96.12cs traded for -1.5 in 3k
• SFRM5 95.87/95.81/95.75p fly, bought for 3 in 4k
• SFRQ5 95.87^, bought for 23 in 2k
• SFRZ5 95.81/95.68/95.62/95.25 broken put condor, traded for 3 in 3k
• SFRH6 95.62p traded for 6 in 2k
• SFRH6 96.25p vs 2QH6p, bought the 2yr for 1.5 in 6.5k
• SFRH6 95.62/95.50/95.37/95.25p condor, traded for half in 2.5k
• 0QU5 96.00/95.75ps vs 0QV5 96.25/96.00ps spread, traded for the Oct 2.5 in 2.5k
• 0QZ5 96.25/9600/95.62 broken Put Fly, bought for 1.25 in 10k
• FVN5 107.00 puts ~8.3K change hands at 0-07+, flow initially triggered by a buyer