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 lowe...
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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.
