FOREX: Risk Optimism/USD Weakness on Israel/Lebanon Negotiations
Apr-09 17:16
- Today’s FX session has been characterised by dollar weakness. Although gradual at first, the moves started to accelerate in late session as Israel PM Netanyahu announced he has instructed his cabinet to open direct negotiations with Lebanon at the earliest possible time.
- The news put the top in crude futures and has assisted a fresh wave of equity strength, with the major benchmarks extending fresh post-ceasefire highs. While the dollar index is exhibiting 0.45% losses on the session, the DXY remains shy of yesterday’s lows, located at 98.53.
- High beta currencies within the G10 are rallying well, with the likes of NOK, AUD and NZD outperforming, while EUR and GBP are posting 0.4% advances against the greenback. Emerging markets continue to be well supported, with USDMXN sinking to 17.35 as the peso extends its impressive rebound. The pair has narrowed the gap back to prior cycle lows around 17.10 substantially.
- Combined with the positive equity senitment, the more contained retracement for fixed income markets reflects the concerns regarding the inflationary shock, all contributing to relative pressure on the Japanese yen on Thursday, which underperforms its G10 peers. EURJPY has rallied 0.6% today, taking the cross back above the 186.00 mark with this week’s climb highlighting a bullish reversal and a recent false break of a bull channel support drawn from the Feb 28 ‘25 low.
- 186.36 is the next level on the topside (the Feb 9 high), before 186.87, the Jan 23 high and a key medium-term resistance. Meanwhile, EURUSD has pressed back above 1.17, with price action strengthening a short-term bullish theme and signalling scope for an extension to 1.1746, a Fibonacci retracement.
- All focus turns to Friday’s release of US CPI. Other scheduled releases include China CPI/PPI, Canada employment and prelim readings of UMich sentiment and inflation expectations.
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US TSYS/SUPPLY: 3Y Note Auction Review: Rare Tail, Soft Stats
Mar-10 17:12
Tuesday's 3Y Note auction brought a rare tail: 1.1bp with a 3.579% high yield vs 3.568% when-issued.
- Not only is this the first 3Y tail after six consecutive auction trade-throughs, it is the largest tail since April 2025's 3Y sale (2.4bp, also a time of geopolitical turmoil, the White House's tariff "Liberation Day").
- Peripheral stats were soft. Dealers took down 19.5% of competitives, the highest since April 2025; directs took 20.7% (5-auction avg 26.9%) with indirects 59.8% (5-auction avg 62.3%).
- Bid-to-cover of 2.55x was the lowest since the last time we saw a 3Y auction tail, in August 2025.
- Short-end yields ticked up 0.8-0.9bp after the surprise tail but swiftly recovered as oil prices extended to session lows.
FED: US TSY 3Y NOTE AUCTION: HIGH YLD 3.579%; ALLOTMENT 17.59%
Mar-10 17:02
- US TSY 3Y NOTE AUCTION: HIGH YLD 3.579%; ALLOTMENT 17.59%
- US TSY 3Y NOTE AUCTION: DEALERS TAKE 19.50% OF COMPETITIVES
- US TSY 3Y NOTE AUCTION: DIRECTS TAKE 20.66% OF COMPETITIVES
- US TSY 3Y NOTE AUCTION: INDIRECTS TAKE 59.84% OF COMPETITIVES
- US TSY 3Y AUCTION: BID/CVR 2.55
US 10YR FUTURE TECHS: (M6) Monitoring Resistance
Mar-10 16:55
- RES 4: 113-13+ Low Feb 27
- RES 3: 113-07+ High Mar 3
- RES 2: 113-03 High Mar 4
- RES 1: 112-22/112-24+ 20-day EMA / High Mar 10
- PRICE: 112-20 @ 16:40 GMT Mar 10
- SUP 1: 111-26+ Low Mar 6 and the bear trigger
- SUP 2: 111-21+ Low Feb 9
- SUP 3: 111-13+ Low Feb 5
- SUP 4: 111-06+ Low Jan 20 and a key support
The current bear cycle in Treasuries remains intact and a fresh cycle low on Monday reinforces the bear theme. The recovery from yesterday’s is - for now - considered corrective. A resumption of the bear cycle would signal scope for an extension towards the next key support at 111-06+, the Jan 20 low. Initial firm resistance is seen at 112-22, the 20-day EMA. It has been pierced, a clear break of it is required to signal a possible reversal.
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