OUTLOOK: Price Signal Summary - JPY Bears Remain In The Driver’s Seat
Apr-26 10:20
- In FX, EURUSD is trading higher today. The pair has pierced resistance at 1.0726, the 20-day EMA. The move higher appears to be a correction that is allowing a recent oversold condition to unwind. A resumption of the downtrend would open 1.0568 next, the Nov 2 2023 low, and 1.0534, the base of a bear channel drawn from the Dec 28 high. A clear break of the 20-day EMA would instead signal scope for a stronger recovery towards 1.0780, the 50-day EMA.
- The trend condition in GBPUSD remains bearish and this week’s recovery appears to be a correction - for now. The move higher is allowing an oversold condition to unwind. The recent break lower, maintains the downward price sequence of lower lows and lower highs. A resumption of weakness would open 1.2266, the Nov 14 2023 low. Resistance to watch is 1.2583, the 50-day EMA.
- The USDJPY trend condition remains bullish and the pair continues to appreciate. This week’s move higher confirms a resumption of the primary uptrend. Sights are on 157.65 next, the 2.236 projection of the Feb 1 - 13 - Mar 8 price swing. On the downside, support to watch lies at 153.56, the 20-day EMA.
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CANADA: Mar Housing Wrap: Stabilizing Ahead Of Expected Spring Resurgence
Mar-27 10:20
- Canadian housing market stabilized in February after mild resurgence at the beginning of the year. CREA economists expect spring resurgence similar to last year after the BoC signaled a pause.
- Home sales -3.1% from Jan after rebounding +13% from Dec to Jan. Sales +20% YOY. Prices flat on the month and +0.8% YOY.
- Housing starts +14% in Feb to 253K after -10% in Jan as construction shifts to multi-unit housing.
- National Bank of Canada expects housing starts to drop and stabilize at 235K units as interest rates weigh on the construction sector.
- Teranet Housing Index +0.2% MOM after SA and +0.4% Non-SA, both measures posted the first increase after four and five consecutive decreases respectively. Prices +4.5% YOY.
- Shelter costs have become major source of inflation as BOC considers when it can cut rates. Mortgage interest costs +26% YOY in Feb and rent +8.2% in StatsCan's CPI report.
- Mortgage delinquency is on the rise, the Canadian Banking Association says 0.18% of mortgages are in arrears, the highest since Sept 2021.
- Federal govt is trying to curb housing demand by decreasing the number of study and temporary resident permits.
US TSYS: Wednesday Data Calendar: Wholesale Sale/Inventories, Tsy Supply
Mar-27 10:17
- US Data/Speaker Calendar (prior, estimate)
- Mar-27 0700 MBA Mortgage Applications (-1.6%, --)
- Mar-27 1000 Revisions: Wholesale sales, inventories
- Mar-27 1130 US Tsy $28B 2Y FRN auction, $60B 17W Bill auction
- Mar-27 1300 $43B 7Y Note auction (91282CJU6)
- Mar-27 1800 Fed Gov Waller on outlook at Economic Club NY, text, Q&A
BOE: FPC Minutes due at 10:30GMT
Mar-27 10:15
- The Bank of England's FPC Minutes from their quarterly meeting will be released at 10:30GMT today. There will be no Financial Policy Report released today (the last one was in December with the next due in June.
- The main focus from the macro side will be whether the countercyclical buffer (CCyB) will be adjusted from its current level of 2% (it is not expected to be changed). We therefore do not expect a market reaction in either FX, gilts or STIR.
- In December, the FPC Minutes noted that "The overall risk environment remains challenging, reflecting subdued economic activity, further risks to the outlook for global growth and inflation, and increased geopolitical tensions."
- The following language will also be monitored for wider cross-asset impacts:
- "UK borrowers and the financial system have been broadly resilient to the impact of higher and more volatile interest rates."
- The December Minutes also noted that "household finances remain stretched by increased living costs and higher interest rates, some of which has yet to be reflected in higher mortgage repayments. Arrears for secured and unsecured credit remain low but are rising as the impact of higher repayments is felt by borrowers."
- In terms of valuations: "Given the impact of higher and more volatile rates, and uncertainties associated with inflation and growth, some risky asset valuations continue to appear stretched."
- "UK corporates’ ability to service their debts has improved due to strong earnings growth and the sector is expected to remain broadly resilient to higher interest rates and weak growth. But the full impact of higher financing costs has not yet passed through to all corporate borrowers, and will be felt unevenly, with some smaller or highly leveraged UK firms likely to remain under pressure. Corporate insolvency rates have risen further but remain low."
- "The UK banking system is well capitalised and has high levels of liquidity. It has the capacity to support households and businesses even if economic and financial conditions were to be substantially worse than expected."
