OUTLOOK: Price Signal Summary - Trend Needle In Gilts Points South
Aug-20 11:44
- In the FI space, a bear threat in Bund futures remains present. The contract traded sharply lower Friday resulting in a breach of 128.84, the Jul 25 low and bear trigger. Note that the 129.00 handle marks the base of a broad range and a clear range breakout would strengthen a bearish threat. This would open 128.40 initially, the Apr 9 low. Strength above the 50-day EMA of 129.89, is required to signal a reversal. Resistance at the 20-day EMA is at 129.58.
- Gilt futures traded sharply lower last Friday and Monday’s sell-off confirmed a bearish start to the week, strengthening current conditions. The contract has breached key short-term support and a bear trigger at 91.08, the Jul 18 low. This signals scope for an extension towards 90.11, the May 22 low. On the upside, resistance to watch is seen at 91.94, the 50-day EMA. Clearance of this average is required to highlight a potential reversal. First resistance is 91.32, Monday’s high.
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FOREX: USD Dips on Renewed Flattening Pressure
Jul-21 11:37
- Renewed flattening pressure in the Treasury curve is keeping the USD under pressure here - and GBP/USD is testing the Friday high as a result. Lower volumes are aiding the price action here, with G10 FX futures markets showing below-average activity for this time of day.
- Anticipated trade tension remains a key driver here as markets narrow in on the early August deadlines for US-RoW reciprocal tariffs, and the expiry of the extension granted to China to strike a broader deal. Retaliatory measures from the EU could be a key driver ahead. We reported last week that support for EU retaliation against US tariffs is "growing among member states and in the European Parliament, amid expectations that a likely trade deal by the Aug 1 deadline will disappoint the hopes of countries including France".
- As a result of greenback weakness to start this week, the USD Index has been contained by the 50-dma, which continues to trend lower. Failure to break above the 50-dma (today at 98.653) will signal that the correction higher off 96.377 may have concluded.
TARIFFS: Bessent On Trade Talks
Jul-21 11:34
- "U.S. TREASURY SECRETARY BESSENT ON AUG 1 DEADLINE: TALKS ARE MOVING ALONG -CNBC" Reuters
- "U.S. TREASURY SECRETARY BESSENT ON AUG 1 DEADLINE: QUALITY OF DEAL, NOT TIMING IMPORTANT" Reuters
- "*BESSENT: DOESN'T HAVE TO GET UGLY WITH THE EUROPEANS" Bloomberg
OUTLOOK: Price Signal Summary - Bunds Trade Through The 50-Day EMA
Jul-21 11:25
- In the FI space, Bund futures are trading higher today. The climb has resulted in a test of resistance around the 50-day EMA, at 131.21. A clear break of the EMA would undermine the recent bear theme and highlight a possible reversal. This would open 130.76 initially, the Jul 4 high. Clearance of this level would strengthen a bullish theme. Key support and the bear trigger has been defined at 129.08, the Jul 14 low.
- Gilt futures are also trading higher, however, for now, a bear cycle remains in play and last week’s bearish activity reinforces this theme. The contract has recently breached support at 91.63, the Jul 2 low. Price has also traded through 91.50, the 61.8% retracement of the May 22 - Jul 1 bull leg. The move down exposes 90.97, the 76.4% retracement point. Initial firm resistance is at 91.99, the 20-day EMA.
