BUNDS: Some Cash led selling interest on the Open
- Some early selling interest, potentially Cash led has pushed the German Bond strip to its session low, albeit still in limited range.
- The German 10yr Bund saw its best single hourly move since the last US Core PCE and the FOMC, gaining 97 ticks throughout Yesterday's afternoon session.
- Yesterday's high of 131.63 has held so far today, printed a 131.61 high.
- Some Technical will look at 131.71 for the next immediate resistance, but better is seen at 131.91, the 23.6% retracement of the massive 690 ticks fall (from the 2nd Dec high).
- A pullback down to 130.70 would represent a US CPI reversal.
- The German final CPI was inline, just a 1 tenth higher revision on the MoM reading, the UK Data was a slight miss, but the German strip has seen selling interest on the Cash open.
- Italy final CPI is the only other release out of Europe, as such, focus today is on the US IJC and Retail Sales.
- ECB will also release its account of the last meeting.
- SUPPLY: Spain 5, 12s, 25s.
- SYNDICATION: Ireland 30yr.
- SPEAKERS: ECB Panetta.
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US TSY FUTURES: TU/UXY Flattener Blocked
Latest block trade lodged at 07:01:52 London/02:01:52 NY:
- TUH5 4.0K lots blocked at 102-27.25, looks like a seller.
- UXYH5 1,750 lots blocked at 112-28, looks like a buyer.
- Points to a ~$156K DV01 flattener block.
- 2s10s 0.5bp flatter since the block was lodged.
- Spread trades at ~15bp, which would represent the highest close since mid-November.
Fig. 1: U.S. 2-/10-Year Yield Curve
Source: MNI - Market News/Bloomberg
EURJPY TECHS: Has Traded Through The 50-Day EMA
- RES 4: 165.04 High Nov 15 and a key short-term resistance
- RES 3: 164.21 76.4% retracement of the Oct 31 - Dec 3 bear leg
- RES 2: 162.68 61.8% retracement of the Oct 31 - Dec 3 bear leg
- RES 1: 162.48 Intraday high
- PRICE: 161.85 @ 07:16 GMT Dec 17
- SUP 1: 160.58 20-day EMA
- SUP 2: 158.67/157.87 Low Dec / 09
- SUP 3: 156.18 Low Dec 03 and the bear trigger
- SUP 4: 155.15 Low Sep 16 and a key support
EURJPY remains in a short-term bull cycle as the cross extends the current corrective phase. Moving average studies are in a bear mode position, highlighting a dominant downtrend. However, price has traded through the 50-day EMA, at 161.60. A clear break of this average would undermine a bearish theme and signal scope for a stronger recovery. Initial support to watch is 158.67, the Dec 11 low. A breach of it would signal a reversal.
BTP TECHS: (H5) Retracement Mode
- RES 4: 124.00 Round number resistance
- RES 3: 123.83 1.764 proj of the Nov 7 - 15 - 18 price swing
- RES 2: 123.43 1.618 proj of the Nov 7 - 15 - 18 price swing
- RES 1: 122.85/123.34 High Dec 12 / 11 and the bull trigger
- PRICE: 121.30 @ Close Dec 16
- SUP 1: 121.07 38.2% retracement of the Nov 7 - Dec 11 bull cycle
- SUP 2: 120.37 50.0% retracement of the Nov 7 - Dec 11 bull cycle
- SUP 3: 119.67 61.8% retracement of the Nov 7 - Dec 11 bull cycle
- SUP 4: 119.11 Low Nov 18
A corrective cycle in BTP futures has resulted in a pullback from recent highs and last week’s sell-off signals potential for an extension near-term. The contract has breached the 20-day EMA and this opens 121.07 and 120.37, Fibonacci retracement points. Key resistance and the bull trigger has been defined at 123.34, the Dec 11 high. A breach of this level would confirm a resumption of the recent uptrend.
