EM CEEMEA CREDIT: South Africa: headlines

For the full MNI BOE Preview including summaries of over 20 sell side views, click here.

• The outcome for this week’s MPC meeting can be boiled down to two discrete topics: the vote surrounding the pace of APF reduction and any updates on communications and the vote surrounding Bank Rate. The biggest uncertainty and market reaction is expected around the former, with much less focus being placed upon the latter – but neither aspect should be ignored.
• If the APF decision was down to us, we would favour a target of GBP60-65bln with active sales in line with this year but with a change to the maturity buckets to re-align with the DMO. That would see short remaining at 3-7 years, medium to 7-15 years (rather than BOE’s 7-20 years) and long 15+ years (rather than 20+ years).
• Around 70% of analysts look for the decision to be between GBP60-75bln - but the range is wide from ending active sales (GBP49bln total reduction) to continuing with the total reduction of GBP100bln.
• A 7-2 vote split is widely expected (by us and the analyst previews we have read) with both Dhingra and Taylor dissenting for a 25bp cut.
• We would be surprised by a change in guidance - given that it was tweaked at the last meeting.

• RES 4: 6750.50 2.000 proj of the Aug 20 - 28 - Sep 2 price swing
• RES 3: 6748.50 1.236 proj of the Aug 1 - 15 - 20 price swing
• RES 2: 6712.33 1.764 proj of the Aug 20 - 28 - Sep 2 price swing     
• RES 1: 6700.00 Round number resistance 
• PRICE: 6665.75 @ 07:22 BST Sep 17
• SUP 1: 6559.62 20-day EMA
• SUP 2: 6506.50 Low Sep 5 
• SUP 3: 6452.53 50-day EMA 
• SUP 4: 6417.25 Low Aug 12 

A bull cycle in S&P E-Minis remains intact and the contract is trading closer to its recent highs. A fresh cycle high yesterday reinforces current bullish conditions. The move higher confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Sights are on the 6700.00 handle next and 6712.33, a Fibonacci projection. On the downside, initial support to watch is 6569.89, the 20-day EMA.

• RES 4: $77.85 - 2.794 proj of the Apr 9 - 23 - May 5 price swing
• RES 3: $75.65 - 2.500 proj of the Apr 9 - 23 - May 5 price swing
• RES 2: $74.25 - High Jun 23 and a bull trigger 
• RES 1: $66.03/69.36 - High Sep2 / High Jul 30 and key resistance   
• PRICE: $64.38 @ 07:19 BST Sep 17
• SUP 1: $61.29 - Low Aug 13 and the bear trigger 
• SUP 2: $57.71 - Low May 30
• SUP 3: $54.80 - Low May 5
• SUP 4: $54.03 - Low Apr 9 and a key support

The trend condition in WTI futures is unchanged - a bear cycle remains intact and the latest recovery is considered corrective. The pullback from the Sep 2 high highlights a possible recent reversal and the end of a corrective phase between Aug 13 - Sep 2. Initial resistance to watch is $66.03, the Sep 2 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. A stronger resumption of weakness would open $57.71, the May 30 low.