STIR: RBA Dated OIS Gives Up Part Of Its Post-CPI Softening

• RES 4: 1.3852 1.764 proj of the Feb 28 - Apr 3 - 7 price swing
• RES 3: 1.3835 High Oct 20 2021
• RES 2: 1.3800 Round number resistance
• RES 1: 1.3771 High Jun 26
• PRICE: 1.3740 @ 06:19 BST Jul 1
• SUP 1: 1.3632/3569 High Jun 13 / 20-day EMA 
• SUP 2: 1.3426 50-day EMA
• SUP 3: 1.3328 Trendline support drawn from the Jan 13 low 
• SUP 4: 1.3140 Low May 12 and key support

GBPUSD is trading at its recent highs. The trend needle continues to point north and last week’s climb reinforces bullish conditions. Fresh cycle peaks maintain the price sequence of higher highs and higher lows. Note too that MA studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Sights are on 1.3800 next. Initial support to watch lies at 1.3569, the 20-day EMA. A break would signal scope for a corrective pullback.

JGB futures are stronger, +23 compared to settlement levels, and hovering near session highs after today’s 10-year auction. 

• This comes despite the 10-year JGB auction delivering only mixed to solid results. The low price beat expectations at 100.40, according to the Bloomberg dealer poll. However, the cover ratio decreased slightly to 3.5070x from 3.6627x, and the tail lengthened to 0.03 from 0.01, albeit the shortest since March 2023.
• Cash US tsys are 1-2bps richer, with a flattening bias, in today's Asia-Pac session, extending yesterday's bull-flattener. Today's US calendar: S&P Global US Man PMI, Wards Total Vehicle Sales, ISM Manufacturing, Construction Spending, JOLTS, Dallas Fed Services Activity.
• The Q2 Tankan survey delivered some positive upside surprises. The large manufacturing index rose to 13, versus 10 forecast and 12 prior. The outlook for this segment was also better than forecast, printing at 12 (9 was forecast and 12 was the Q1 outcome).
• Cash JGBs have reversed pre-10-year auction weakness to be 1-3bps richer across benchmarks, with the 10-year leading. The benchmark 10-year yield is 3.3bps lower at 1.399% versus the cycle high of 1.596%.
• Swap rates are flat to 1bp lower. Swap spreads are mixed.
• Tomorrow, the local calendar will see Monetary Base data.