OUTLOOK: Price Signal Summary - Trend Direction In Bunds Remains Down

Jul-12 10:32
  • In the FI space, Bund futures are consolidating and maintain a softer tone following last week’s extension lower. Price has cleared key support and the bear trigger at 132.12, the May 26 low. The break strengthens bearish conditions and confirms a resumption of the downtrend. This opens 130.46,the 1.236 projection of the Jun 1 - 16 - 27 price swing. Moving average studies are in bear-mode position, reinforcing a bearish theme. Initial firm resistance is at 132.18, the Jun 16 low.
  • The trend needle in Gilt futures continues to point south. Last week’s break lower reinforces bearish conditions and the contract has cleared key support at 93.88, the Jun 20 low, confirming a resumption of the downtrend and maintaining the bearish price sequence of lower lows and lower highs. This signals scope for a move to 91.80 next,1.382 projection of the Jun 1 - 20 - 23 price swing (cont). Initial firm resistance is 93.88. A break of this level is required to ease bearish pressure.

Historical bullets

OUTLOOK: Price Signal Summary - Oil Futures Remain Vulnerable

Jun-12 10:32
  • On the commodity front, the bear cycle in Gold remains intact. The yellow metal traded lower last Wednesday and once again pierced trendline support drawn from the Nov 3 2022 low. The trendline intersects at $1958.0. A clear breach of this line would reinforce bearish conditions and open $1903.5, 61.8% of the Feb 28 - May 4 bull cycle. Initial firm resistance is $1985.3, the May 24 high. Clearance of this level would instead signal a short-term reversal.
  • In the oil space, WTI futures continue to trade below key short-term resistance at $75.06, the Jun 5 high. The pullback from this level reinforces a bearish theme. A continuation lower would signal scope for weakness towards $67.03, the May 31 low and key support at $63.90, the May 4 low. Moving average studies are in a bear mode position highlighting a downtrend. On the upside, a break of resistance at $75.06 is required to highlight a potential bullish theme.

OPTIONS: Expiries for Jun12 NY cut 1000ET (Source DTCC)

Jun-12 10:29
  • EUR/USD: $1.0650-70(E1.6bln), $1.0695-00(E541mln), $1.0710-20(E839mln), $1.0740-50(E554mln), $1.0787-00(E984mln), $1.0860(E501mln)
  • USD/JPY: Y139.50($503mln)
  • USD/CNY: Cny7.1500($541mln)

CHF: Goldman Sachs: Playing A Different Game

Jun-12 10:26

Late on Friday Goldman Sachs wrote “by most standards, the SNB has been uniquely successful in fighting inflation. There have now been three downside surprises in a row on both headline and core CPI.”

  • “However, the SNB has the strictest inflation mandate of any G10 central bank.”
  • “And so, despite this better data (which was lower than the latest SNB forecasts), President Jordan struck a concerned tone by saying that inflation is more persistent than the SNB expected and that low rates meant there was no need to wait before hiking further.”
  • “As a result, we think it is probably too soon for the SNB to materially step back from monetary policy tightening and FX intervention.”
  • “However, given the recent headline inflation relief, especially in Europe, we now expect somewhat less nominal exchange rate appreciation than previously.”
  • “Putting the near-term hawkish narrative together with headline inflation relief abroad, we revise our EUR/CHF forecast to CHF0.95, CHF0.94, CHF0.93 in 3, 6 and 12 months (vs. CHF0.96, CHF0.94, CHF0.92 previously).