US TSYS: Stabilization Before A Thin Docket Ahead After Last Week’s Swings
- Treasuries have recently pared losses to further limit moves from Friday’s close with the nonfarm payrolls report and its hugely weak two-month revisions digested. For a succinct summary of last week's swings seen after a patient Fed and weak payrolls report, see the MNI US Macro Weekly (link here).
- We touch on it more in the STIR bullet but President Trump says he will announce a new Fed Governor and BLS commissioner in the coming days following a surprise resignation/termination on Friday.
- Cash yields are 1-2bp higher on the day, with 2Y yields for instance more than 25bp before pre-payrolls levels.
- 10Y yields, currently at 4.232%, appeared to meet some support at 4.20% on Friday, touching 4.2002%. It last breached 4.20% on Jul 1 and before that late Apr/early May.
- TYU5 trades at 112-05+ (-01) having pulled back off an overnight high of 112-12, on solid cumulative volumes of 510k as non-US participants caught up with Friday’s price action.
- Friday’s rally punched through 111-14+ (Jul 22/30 high) whilst the overnight high stopped just short of resistance at a bull trigger of 112-12+ (Jul 1 high). There’s further resistance seen shortly after with 112-15 (61.8% retrace of Apr 7-11 sell-off).
- Data: Factory orders Jun (1000ET)
- Fedspeak: None scheduled
- Bill issuance: US Tsy $82B 13W, $73B 26W bill auctions (1130ET)
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Historical bullets
USDCAD TECHS: Trend Outlook Remains Bearish
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.3674/3776 20- and 50-day EMA values
- PRICE: 1.3607 @ 16:12 BST Jul 4
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
The trend needle in USDCAD points south and this week’s move down reinforces current conditions. S/T gains between Jun 16 - 23 appear to have been corrective. Key support and the bear trigger is 1.3540, Jun 16 low. Clearance of this level would resume the downtrend and open 1.3503, a Fibonacci projection. Pivot resistance is at the 50-day EMA, at 1.3776. A clear break of this average would signal scope for a stronger recovery.
AUDUSD TECHS: Bull Cycle Remains In Play
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01
- PRICE: 0.6548 @ 16:05 BST Jul 04
- SUP 1: 0.6521 20-day EMA
- SUP 2: 0.6468/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and the pair is holding on to its recent gains. The latest break higher maintains the bullish price sequence of higher highs and higher lows, the definition of an uptrend. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 0.6603 next, the Nov 11 2024 high. Key short-term support has been defined at 0.6373, the Jun 23 low.
EURJPY TECHS: Northbound
- RES 4: 171.88 High Jul 19 ‘24
- RES 3: 171.28 1.382 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 2: 171.09 High Jul 23 ‘24
- RES 1: 170.61 High Jul 03
- PRICE: 170.22 @ 16:04 BST Jul 04
- SUP 1: 169.04 Low Jul 02
- SUP 2: 167.87 20-day EMA
- SUP 3: 167.13 Low Jun 20
- SUP 4: 165.66 50-day EMA
EURJPY traded higher on Thursday resulting in a print above 170.47, the 76.4% retracement of the Jul 11 - Aug 5 sell-off. A clear break of this price point would strengthen bullish conditions and signal scope for extension. This would open 170.28 next, a Fibonacci projection. The trend is overbought, a pullback would unwind this condition. Support to watch lies at 167.87, the 20-day EMA.
