EURGBP TECHS: Resistance Remains Intact For Now
Jun-06 18:00
- RES 4: 0.8557 High Apr 28
- RES 3: 0.8541 High May 2
- RES 2: 0.8493 High May 9
- RES 1: 0.8441/59 50-day EMA and key resistance / High May 21
- PRICE: 0.8419 @ 15:56 BST Jun 6
- SUP 1: 0.8356 Low May 29
- SUP 2: 0.8327 1.382 proj of the Apr 11 - 16 - 21 price swing
- SUP 3: 0.8316 Low Mar 28 and a key support
- SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing
EURGBP is unchanged and a bear cycle is still in play. A key short-term resistance to watch is 0.8441, the 50-day EMA. It has been pierced, however, a clear break of it is required to highlight a stronger reversal. This would expose 0.8541. On the downside, support to watch lies at 0.8356, the May 29 low. Clearance of this level would resume the downtrend and open 0.8316, the Mar 28 low and a key support.
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CHINA: Additional Analyst Views On Today’s Stimulus Measures
May-07 17:56
- ABN AMRO says that today’s measures were in line with their expectation of additional monetary easing in the form of policy rate and RRR cuts, combined with the further stepping up of fiscal support. They expect cuts in other policy rates, such as the loan prime rates, and the 1-year medium-term lending facility rate, to follow soon.
- ANZ believes that the timing of the announcement offers a policy buffer for Chinese exporters before the trade talk between US and Chinese officials in Switzerland this week. The authorities are prepared to have a protracted negotiation and hold a strong stance against protectionism. Given the extent of policy easing, the onshore interest rate will drop further in May. Banks will receive a large injection ahead of summer when many college graduates enter the job market. The overnight repo will likely be guided to below 1.5%.
- DBS says that the new set of policies sends a positive signal to the market. Offshore CNH once hit 7.19 on an intra-day basis. Onshore 2Y CGB yields edge down from 1.48% to 1.46%, while 10Y yields remain steady at around 1.63%. Looking ahead, the benchmark rate cut will likely keep short-end CGB yields in-check. Long-end rate will remain stable amid a more optimistic growth outlook, better asset market performance and accelerating bond issuance. The upshot is that curve will likely steepen.
- Nomura does not believe these monetary and financial policies on their own are sufficient to address the double whammy faced by the economy. A slump in exports appears inevitable, while the property sector is still declining at a worrying pace. To cope with these unprecedented challenges, Nomura believes Beijing needs to take bolder moves, especially on the fiscal front. They maintain their forecast for another 50bp RRR and a 15bp policy rate cut in Q4.
FED: Likely URLs For May Fed Decision
May-07 17:55
Likely Fed URLs based on previous meetings (they will only go live at 1400ET):
- Statement: https://www.federalreserve.gov/newsevents/pressreleases/monetary20250507a.htm
- Implementation note: https://www.federalreserve.gov/newsevents/pressreleases/monetary20250507a1.htm
- Press Conference (for 1430ET): https://www.federalreserve.gov/monetarypolicy/fomcpresconf20250507.htm
STIR: BLOCK: Sep'25/Dec'25 SOFR Call Calendar Spread
May-07 17:53
- 6,000 SFRU5 95.81/SFRZ5 95.68 put spds, 1.0 net/Sep over at 1346:47ET
