GBPUSD TECHS: Pullback Considered Corrective

JGB futures are weaker, -29 compared to the settlement levels, but above session lows.

• Today's heavy session aligns with weaker US tsys, which are trading 2-4bps cheaper in today's Asia-Pac session, as risk bounces on US-China officials citing 'substantial progress' made from weekend trade talks. US Treasury Secretary Bessent said that further details would be shared today.
• The US data calendar is light today, ahead of US CPI on Tuesday and Retail Sales on Thursday.
• Japan’s April economy watchers survey current condition index fell to 42.6, compared with the median estimate of 44.6.
• Japan’s bank deposits increased at the slowest pace since April 2007 as households seek to safeguard their assets from inflation. Deposits climbed 0.7% in April from a year earlier, decelerating for a third straight month.
• Cash JGBs are 1-6bps cheaper across benchmarks, with a steepening bias. The benchmark 10-year yield is 2.2bps higher at 1.391% versus the session high of 1.41%
• Swap rates are 2-4bps higher, with swap spreads mixed.
• Tomorrow, the local calendar will see BoJ Summary of Opinions (April MPM) and Money Stock data alongside 30-year supply.

• RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 3: 1.1608 High Nov 9 2021
• RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
• RES 1: 1.1381 High May 2 - 6  
• PRICE: 1.1229 @ 06:03 BST May 12
• SUP 1: 1.1186 Intraday low 
• SUP 2: 1.1144 High Apr 3    
• SUP 3: 1.1075 50-day EMA and a pivot level     
• SUP 4: 1.0943 Low Apr 10  

EURUSD maintains a softer short-term tone and the pair is trading at its recent lows. Recent weakness appears corrective and key trend signals remain bullish. However, the pair has traded through the 20-day EMA and this exposes the next important support at 1.1082, the 50-day EMA. On the upside, initial resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction.

ACGBs (YM -6.0 & XM -6.5) are sharply cheaper and near Sydney session lows.

• This move aligns with weaker US tsys, which are trading 2-4bps cheaper in today's Asia-Pac session, as risk bounces on US-China officials citing 'substantial progress' made from weekend trade talks.
• US Treasury Secretary Bessent said there had been 'substantial progress' in the two days of talks with China and that further details would be shared today.
• The US data calendar is light today, ahead of US CPI on Tuesday and Retail Sales on Thursday.
• (Bloomberg) -- “Hedge funds aggressively added to net short positioning in 10-year note futures, while asset managers boosted longs in the sector in the week up to May 6, CFTC data shows.”
• Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at -6bps.
• The bills strip is cheaper with pricing -2 to -5 (late whites leading).
• RBA-dated OIS pricing is flat to 5bps firmer today, leaving meetings 2-24bps firmer than levels before the release of Q1 CPI data on April 30.
• Tomorrow, the local calendar will see Westpac Consumer and NAB Business Confidence measures.
• AOFM plans to sell A$1200mn of the 3.50% 21 December 2034 bond on Wednesday and A$800mn of the 2.50% 21 May 2030 bond on Friday.