OUTLOOK: Price Signal Summary - Bear Threat In Gilts Still Present
May-15 11:09
- In the FI space, for now, a short-term bearish theme in Bund futures remains intact. The contract has recently traded through support at the 50-day EMA, at 130.49. This signals scope for a deeper retracement and this week’s extension strengthens the current bearish threat. A continuation lower would open 128.60, the Apr 9 low and a key support.It is still possible that the move down since Apr 22 is a correction. Initial firm resistance to watch is 130.60, the 20-day EMA.
- Gilt futures traded sharply lower yesterday, extending the current bear cycle. The impulsive sell-off undermines a recent bullish theme. The move down exposes 90.92, 76.4% of the Apr 9 - May 2 rally. A break of this level would strengthen the bearish condition and open 90.47, the Apr 11 low. On the upside, initial resistance to watch is 91.95, the May 12 high. A firmer resistance however is at 92.43, the 20-day EMA.
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FOREX: NZDUSD Extends Five-Day Bounce to 8%, AUD Approaches 0.64
Apr-15 11:04
- The more stable tone for risk this week continues to foster a more constructive backdrop for higher beta currencies in the G10 space. AUD and NZD are rising again on Tuesday, advancing 0.45% and 0.75% against the dollar respectively. For NZDUSD specifically, the pair has rallied as high as 0.5928, perfectly matching initial resistance, at the late November highs. In just 5 sessions, NZDUSD has bounced 8% from its cycle lows.
- The next target resides at the post US election highs of 0.6038 for NZDUSD. Q1 inflation data is scheduled during Thursday’s local session and is the key domestic data this week.
- For AUDUSD, we are reapproaching the 0.6400 mark, and a break above 0.6409 would place the cross at the highest level since December, signalling scope for a stronger recovery towards 0.6550, the Nov 25 high.
- The RBA board doubted increasing global tariffs would have a significant impact on domestic economic growth, despite acknowledging this could change, according to the published minutes from the April 1 decision. The focus turns to Thursday’s release of March employment data.
US TSYS: Broad Consolidation Of Yesterday’s Large Rally
Apr-15 10:55
- Treasuries broadly consolidate yesterday’s large rally, albeit with a larger intraday sell-off for 30s as relative weakness remains in play.
- Today sees the Empire manufacturing report offer the first regional Fed survey for April business conditions amidst tariffs (although its volatile nature will cloud any surprises) whilst import prices will be watched for a final steer on core PCE estimates (unlikely to move more than a few bps from a ‘low’ rounded 0.1% M/M).
- President Trump’s reaction to China halting Boeing jet deliveries and purchases of aircraft-related equipment and parts from US companies – per Bloomberg reporting – will also be watched.
- With earnings season increasingly getting underway, Johnson & Johnson beat adjusted EPS estimates ($2.77 vs $2.60) for Q1.
- Cash yields are 1.5-2.5bp lower, with 5s again outperforming.
- TYM5 trades at 110-19 (-04+) after overnight modestly extending yesterday’s sizeable gains with a high of 110-27+. Volumes have seen a second more typical overnight session, currently at 310k.
- Resistance is seen at 111-00+ (20-day EMA) but a bear threat remains present with support at 109-08 (Apr 11 low).
- Data: International prices Mar (0830ET), Empire manufacturing Apr (0830ET)
- Fedspeak: Cook at alumni event (1910ET, text only) – see STIR bullet
- Bill issuance: US Tsy $48B 52W & $70B 6W bill sales (1130ET)
OUTLOOK: Price Signal Summary - Resistance In WTI Remains Intact
Apr-15 10:50
- On the commodity front, the trend condition in Gold remains bullish and price is trading at its recent highs. The yellow metal last week traded through $3167.8, the Apr 3 high, to resume the primary uptrend and trade to fresh all-time highs. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 3077.5, the 20-day EMA. Sights are on 3291.8, a 1.00 projection of the Feb 28 - Apr 3 - Apr 7 price swing.
- In the oil space, a bearish theme in WTI futures remains intact and the rally last Wednesday is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open $54.26, a 2.236 projection of the Feb 11 - Mar 5 - Apr 2 price swing. Initial firm resistance is seen at $64.85, the Mar 5 low and a recent breakout level.
