AUSSIE BONDS: Showing Strength, Watching Russian Headlines, CPI Monthly On Wednesday
ACGBs showed strength in the Sydney session (YM +6.0 & XM +4.0). The trading range remained relatively narrow, lacking significant domestic catalysts. Instead, the movements in the local market seemed to be influenced by the slight upward trajectory of US tsys, which responded to the political unrest that occurred in Russia over the weekend. Asia-Pac trading saw cash US tsy yields 1-2bp lower. It is worth highlighting, however, that global markets, including commodities like oil and gold, as well as stocks and currencies, demonstrated a notable sense of stability throughout Monday's Asian trading session.
- Cash ACGBs are 4-7bp richer with the 3/10 curve steeper and the AU-US 10-year yield differential +4bp at +24bp.
- Swap rates are 4-7bp lower with the 3s10s curve steeper.
- The bills strip bull flattens with pricing +5 to +9.
- RBA-dated OIS pricing is 3-7bp softer across meetings.
- The local calendar is light tomorrow with the weekly highlights being Wednesday’s CPI Monthly and Thursday's Retail Sales releases. CPI monthly is expected to print at 6.1% y/y, after the unexpected jump to 6.8% in April. Meanwhile, retail sales are expected to provide further confirmation that the consumer slowdown is underway.
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JGB TECHS: (M3) Corrects Lower
- RES 3: 151.26 - High Mar 3 2022
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5 2022
- RES 1: 149.53 High Mar 22
- PRICE: 148.53 @ 16:25 BST May 26
- SUP 1: 147.31/27 - 50-day EMA / Low Apr 18
- SUP 2: 145.80/144.73 - Low Mar 13 / Low Feb 13
- SUP 3: 144.15 - Low Jan 13
JGBs slid sharply Thursday, as hawkish Ueda comments prompted a correction. The bounce Friday helped stall any more protracted pullback, although the gap with next resistance at 149.17 remains. The strong recovery from 147.27, the Apr 18 low confirms the corrective nature of the recent pullback, keeping medium-term attention on 149.53, the Mar 22 high and the bull trigger. A break of this level would confirm a resumption of the uptrend. To the downside, the 50-dma provides support at 147.31, just above the Apr 18 low.
MNI: TREASURY GENERAL ACCOUNT $38.8B MAY 25 VS $49.5B PREV DAY
- MNI: TREASURY GENERAL ACCOUNT $38.8B MAY 25 VS $49.5B PREV DAY
USDCAD TECHS: Key Short-Term resistance Remains Exposed
- RES 4: 1.3805 High Mar 24
- RES 3: 1.3730 76.4% retracement of the Mar 10 - Apr 14 low
- RES 2: 1.3695 High Mar 28
- RES 1: 1.3668 High Apr 28 and key resistance
- PRICE: 1.3631 @ 16:54 BST May 26
- SUP 1: 1.3485/1.3404 Low May 23 / 16
- SUP 2: 1.3363/15 Low May 11 / 8
- SUP 3: 1.3302 Low Apr 14 and a key near-term support
- SUP 4: 1.3275 Low Feb 14
USDCAD continues to appreciate and a bullish theme remains intact. Sights are set on resistance at 1.3668, the Apr 28 high and a key level. Clearance of this hurdle would strengthen the case for bulls and pave the way for a move towards 1.3695, the Apr 28 high. On the downside, initial support lies at 1.3485, the May 23 low. A break of 1.3404, the May 16 low, is required to reinstate a bearish threat.
