MARKET INSIGHT: Price Signal Summary - FI Space Remains Vulnerable
Aug-18 09:53
- In the equity space, the trend condition in S&P E-Minis remains up and short-term pullbacks are considered corrective. The focus is on 4345.75 next, 2.00 projection of the Jun 17 - 28 - Jul 14 price swing and potentially 4400.00 further out. On the downside, initial firm support is at 4144.39, the 20-day EMA. The short-term uptrend in EUROSTOXX 50 futures remains intact and yesterday’s pullback is considered corrective. Attention is on resistance at 3840.00, the Jun 6 high. A break of this hurdle would strengthen bullish conditions. On the downside, initial firm support is seen at the 20-day EMA which intersects at 3701.10.
- In FX, EURUSD remains below last week’s 1.0368 high (Aug 10). The recent move down appears to be a short-term reversal and means that the pair has failed to clear channel resistance. The bear channel is drawn from the Feb 10 high and intersects at 1.0299. Attention is on support at 1.0123, Aug 3 low. A break would strengthen the bearish theme. Key resistance is at 1.0368. Aug 10 high. Recent price action GBPUSD highlights two important short-term directional triggers; resistance at 1.2293, the Aug 1 high and support at 1.2004, the Aug 5 low. The short-term trend outlook is bullish but a break of 1.2293 is required to reinforce this theme. A clear break below 1.2004 would be bearish - this level has been tested today. USDJPY traded higher Wednesday, extending the bounce off Monday’s 132.56 low. Firm short-term resistance is unchanged at 135.58, Aug 8 high. The Aug 10 sell-off continues to highlight a potential reversal of the recent Aug 2 - 8 correction. A resumption of weakness would open 130.41, the Aug 2 low. A breach of 135.58 would instead expose 135.96, 61.8% retracement of the Jul 14 - Aug 2 downleg.
- On the commodity front, Gold traded lower yesterday, extending the pullback from last week’s high of $1807.9 (Aug 10). Recent gains saw price trade above trendline resistance drawn from the Mar 8 high. The break potentially represents an important technical breach. On the downside, a stronger pullback however would threaten the bullish theme. Watch support at $1754.4 Aug 3 low. The bull trigger is $1807.9. In the Oil space, WTI futures remain vulnerable. This week’s move down has resulted in a print below support at $87.01, the Aug 5 low. The weakness reinforces bearish conditions and a clear break of $87.01 would confirm a resumption of the downtrend. Attention is on $85.37, the Mar 15 low. Key short-term resistance has been defined at $95.05, the Aug 11 high.
- In the FI space, Bund futures traded lower Wednesday, extending the pullback from the Aug 2 high of 159.70. Attention is on the 50-day EMA which intersects at 153.85. This has been pierced and a clear break would signal scope for a deeper pullback. This would open 152.43 next,38.2% retracement of the Jun 16 - Aug 2 rally. Gilts remain vulnerable and yesterday’s sharp sell-off reinforces the current bearish climate. Attention is on 113.69, 61.8% of the Jun 16 - Aug 2 upleg. A clear break would signal scope for a continuation lower and open 113.03, the Jun 30 low.
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EU: EU-Azerbaijan Cooperation Council Starts Following Gas Deal Agreement
Jul-19 09:35
The 18th EU-Azerbaijan Cooperation Council is taking place presently in Brussels, with the EU treading a fine line on interactions with the Caucasus nation.
- Chaired by Azerbaijani Foreign Minister Jayhun Bayramov and EU High Representative for Foreign Affairs and Security Policy, the session is set to discuss, "the state of play and next steps of the EU- Azerbaijan bilateral relations, focusing on the EU-Azerbaijan Partnership Priorities and Sectoral cooperation, and the Eastern Partnership and the implementation of the Economic and Investment Plan. The Cooperation Council will then exchange views on political matters, including regional issues, democracy, rule of law and human rights."
- Only yesterday, Commission President Ursula von der Leyen was in the Azerbaijani capital Baku signing off on a new gas supply deal for the EU. Agreed to deal that is set to see Azerbaijani gas exports to EU rise to at least 20 billion cubic meteres per year by 2027 (still a fraction of current 155bcm/year from Russia)
- However, the EU has previously criticised the gov't of President Ilham Aliyev for perceived crackdowns on democratic activities, but this may subside now following the signing of the LT deal.
- Could spark backlash from Russia, which could seek to offer more support to long-term Azerbaijani adversary Armenia.
GERMAN AUCTION RESULTS: 1.30% Oct-27 Bobl
Jul-19 09:35
| 1.30% Oct-27 Bobl | Previous | |
| ISIN | DE0001141869 | |
| Allotted | E2.684bln | E3.235bln |
| Avg yield | 0.96% | 1.41% |
| Bid-to-cover | 0.74x | 1.01x |
| Buba cover | 1.11x | 1.25x |
| Price | 101.71 | 99.43 |
| Pre-auction mid | 101.715 | 99.432 |
| Previous date | 28-Jun-22 | |
| Total sold | E4bln | E4bln |
EQUITIES: Europe Stocks Pare Gains On ECB 50bp Hike Speculation
Jul-19 09:07
- Asian stocks closed mixed (Japan returned from a Monday holiday): Japan's NIKKEI closed up 173.21 pts or +0.65% at 26961.68 and the TOPIX ended 10.29 pts higher or +0.54% at 1902.79. China's SHANGHAI closed up 1.328 pts or +0.04% at 3279.431 and the HANG SENG ended 185.12 pts lower or -0.89% at 20661.06.
- European stocks pared earlier modest gains after multiple media reports that the ECB was considering hiking by 50bp in July; tech stocks are lagging, with defensives (utilities) leading: the German Dax down 62.77 pts or -0.48% at 12959.81, FTSE 100 down 11.14 pts or -0.15% at 7218.69, CAC 40 down 39.08 pts or -0.64% at 6091.91 and Euro Stoxx 50 down 21.72 pts or -0.62% at 3511.86.
- U.S. futures are a little stronger, with the Dow Jones mini up 90 pts or +0.29% at 31135, S&P 500 mini up 16.25 pts or +0.42% at 3850, NASDAQ mini up 51 pts or +0.43% at 11958.
