UK DATA: Rather mixed outcome likely changes no ones view for the MPC meeting
Overall for the MPC this is a rather mixed release. The small downside surprise in services inflation (0.15ppt vs their Feb MPR forecast) will be a welcome surprise.
- The MPC has shown through its wider communications that it's not too concerned about energy CPI increasing later this year, but if food prices also increase and core goods prices settle at higher levels, that's going to make it harder to get headline CPI back to target without services coming in lower than pre-pandemic levels on a sustainable basis,
- For March this probably changes no one's view. And it's not a big enough surprise to get a bigger reading for the future yet. But it is more of the same with upside surprises to food and core goods.
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GOLD TECHS: Monitoring Resistance
- RES 4: $2762.3 - High Nov 1
- RES 3: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
- RES 2: $2726.2 - High Dec 12 and a key short-term resistance
- RES 1: $2724.8 - High Jan 16
- PRICE: $2706.3 @ 07:21 GMT Jan 20
- SUP 1: $2651.2 - 50-day EMA
- SUP 2: $2596.2/2583.6 - Low Dec 30 / 19
- SUP 3: $2564.4 - Low Nov 18
- SUP 4: $2536.9 - Low Nov 14 and a key support
The recent climb in Gold appears corrective - for now. However, the yellow metal continues to hold on to its latest gains and scope is seen for a continuation higher near-term. The stronger recovery exposes $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2649.0, the 50-day EMA.
BUNDS: US Trump's inauguration Day
- A tight 17 ticks range for Bund Overnight, the US are out for MLK day and Trump's inauguration.
- While the contract is showing slightly in the red, it remains closer to Friday's high, where the initial resistance will be seen.
- The 131.97 high on Friday was also close to the 2.50% level in Yield terms.
- Initial small support comes at 131.50, Friday's low.
- The German PPI came below expectation on the Cash open, but was only worth a 8 ticks gain for the Bund, and there's no Data left for today's session.
- SPEAKERS: ECB Vujcic, Holzmann, Trump's Inauguration should start before noon Local time.
BTP TECHS: (H5) Testing Resistance At The 20-Day EMA
- RES 4: 122.85 High Dec 11
- RES 3: 120.98 61.8% retracement of the Dec 11 - Jan 13 bear leg
- RES 2: 120.45 High Jan 2
- RES 1: 119.33/35 20-day EMA / High Jan 17
- PRICE: 119.07 @ Close Jan 17
- SUP 1: 117.16 Low Jan 13 and the bear trigger
- SUP 2: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
- SUP 3: 116.07 Low Jul 8 ‘24 (cont)
- SUP 4: 115.45 Low Jul 3 ‘24 (cont)
The current bear cycle in BTP futures remains in play and last week’s fresh cycle low reinforces current conditions. However, from a short-term perspective, the latest rally highlights a corrective phase. Resistance to watch is 119.33, the 20-day EMA. A clear break of this level would signal scope for a stronger retracement. The bear trigger has been defined at 117.16, the Jan 13 low.
