EU TECHNOLOGY: SAP SE: Q225 Results         

• While AUD and NZD have also been bearing the brunt of G10 FX declines alongside the Japanese Yen on Monday, the relative outperformance for the likes of EUR and especially CHF are providing notable boosts for some of the yen crosses.
• EURUSD’s resilience around the 1.15 region has allowed EURJPY to extend its rally this month to 3.7%. Price action has been exacerbated by the notable climb back above 168.00 to trade at 11-month highs for the cross, narrowing the gap substantially to 170.00 and 170.47, a key Fibonacci retracement point. It is worth highlighting that the cross is overbought, and a pullback would unwind this condition.
• In similar vein, CHFJPY gains total 3% in June, with recent strength underpinned by the pair reaching an all-time high above the psychological 180.00 mark. Last week’s comparatively hawkish SNB may be providing an additional tailwind here (review here).
• Additionally, the current trajectory highlights how the Franc may be the preferred option in times of geopolitical turmoil, while JPY is seen as a more rate-sensitive haven. A further deterioration of middle east conditions in the form of extensive Iranian retaliation could thus provide further upside potential here. On the upside, projection levels of note from the Apr 25 - May 13 - May 23 price swing are 181.35 and 182.32.

Bund futures are -7 ticks at 130.86, with markets still sensitive to developments in the Middle East after the US attacked Iranian missile sites over the weekend. Israeli attacks on Tehran and the Fordow nuclear facility have continued today, but our commodities team notes that there are no signs that Iran is ready to carry out threats to block oil shipments.

• Bunds remain in consolidation mode and continue to trade below the Jun 13 high. For now, the latest move down appears to be a correction. Key short-term support to watch lies at 130.12, the Jun 5 low.
• German yields are 1-2bps higher, with the 5-year tenor underperforming.
• 10-year EGB spreads to Bunds are within 0.5bps of Friday’s closing levels (with the exception of GGBs, +1.5bps wider). Early narrowing has unwound with European equity futures now off session highs.
• The EU sold 5/10/25-year EU-bonds this morning, with Belgium also scheduled to sell OLOs at 1100BST. Slovenia announced a mandate for a 10-year benchmark.
• The Eurozone flash June services PMI ended up in line with consensus at 50.0 (vs 49.7 prior), somewhat surprising given the German reading was 1.6 points stronger-than-expected and France was only 0.3 points below consensus. This suggests that although the Eurozone ex-Germany and France continues to outperform the two largest economies, momentum in activity levels appears to be converging.
• ECB President Lagarde speaks at EU Parliament at 1400BST, with Nagel speaking on regulation at 1600BST.
• Elsewhere, there is some attention on the outcome of today’s French pension reform negotiations and tomorrow’s German budget/issuance plan. 

Gilts have pared early losses, with questions surrounding the location of some Iranian uranium and hardline rhetoric out of the country allowing the recovery from session lows to extend in recent trade.

• Crude oil briefly traded ~$5 off overnight highs as it moved into negative territory but has recovered ~$1 from session lows.
• Futures back to ~92.70, little changed on the day, after printing as low as 92.25.
• Initial support at the 20-day EMA (92.34) was breached but the June 16 low (92.23) held.
• Bulls hold the upper hand from a technical perspective, but the break of the 20-day EMA presents heightened risk to that outlook.
• Yields are flat to -1bp on the day, 3-4bp off session highs.
• Major curves essentially unchanged on the day, with recent ranges in benchmark yields intact.
• Macro/geopolitical risk dominates local matters, with no meaningful impact from the inline to slightly firmer-than-expected flash PMIs.
• BoE-dated OIS showing 47bp of cuts through Dec, with the next 25bp move almost fully discounted through the September meeting. Pricing for ’25 meetings is ~1bp more hawkish on the day.
• BoE Governor Bailey appears at the Insurance Chairs Dinner this evening.