RATINGS: Stable Sovereign Outlooks Up For Review Later
Potential sovereign rating reviews of note scheduled for after hours on Friday include:
- Fitch on the United Kingdom (current rating: AA-; Outlook Stable)
- Moody’s on Austria (current rating: Aa1; Outlook Stable) & Sweden (current rating: Aaa; Outlook Stable)
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SCANDIS: 20-day EMAs Pierced In EURSEK and EURNOK
EURSEK and EURNOK have each pierced support at their respective 20-day EMAs (11.1849 in EURSEK and 11.8227 in EURNOK), with risk sensitive currencies supported by the US-Japan trade deal overnight. In both crosses, a clear break of the 20-day EMA would undermine a recent bullish theme and highlight a possible reversal.
- In EURSEK, subsequent clustered support is seen at 11.1133 (Jul 10 low) and 11.1021 (50-day EMA). In EURNOK, focus will be on 11.7547 (June 27 low) and 11.7429 (50-day EMA).
- Danske Bank continue to hold an out of consensus bullish view on EUR/Scandi crosses in the medium-term:
- For EURSEK, they note that “as the Swedish savings-investment balance continues to generate net-buying of foreign equities over time, the structural SEK headwinds from equity flows seemingly persists and we stick to a positively sloping profile for EUR/SEK”. However, they note that the cross could see some near-term downside risks if the Riksbank hold rates in September.
- For EURNOK, they “still see long-term drivers in the likes of relative real rates, the relative attractiveness of asset markets and global monetary conditions as contributing factors for a trend higher in EUR/NOK. Also, any escalation in the global trade war similar to what we experienced post “Liberation Day” would be highly negative for NOK”.
- This week’s Scandinavian data calendar has been light so far, but Norwegian LFS unemployment and Q2 industrial confidence are released tomorrow. In Sweden, PPI, LFS unemployment and household lending are due on Friday morning.
SILVER TECHS: Fresh Cycle High
- RES 4: $41.064 - 1.764 proj of the Apr 7 - 25 - May 15 swing
- RES 3: $40.285 - 1.618 proj of the Apr 7 - 25 - May 15 swing
- RES 2: $40.000 - Psychological round number
- RES 1: $39.655 - 1.500 proj of the Apr 7 - 25 - May 15 swing
- PRICE: $39.371 @ 08:15 BST Jul 23
- SUP 1: $37.464 - 20-day EMA
- SUP 2: $36.073 - 50-day EMA
- SUP 3: $35.285 - Low Jun 24
- SUP 4: $33.967 - Low Jun 3
Trend signals in Silver are unchanged and continue to point north. THis week’s gains reinforce bullish conditions - the metal has traded above resistance at $39.132, the Jul 14 high. The break confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on $39.655 next, a Fibonacci projection. On the downside, initial support to watch lies at $37.464, the 20-day EMA.
JGBS: No Reaction To Ishiba Pushback Over Future
Note that JGB futures haven’t reacted to Japanese PM Ishiba’s pushback against reports that he is set to step down, with ongoing Japanese fiscal challenges, the poorly received 40-Year JGB auction and news of the Japanese-U.S. trade deal continuing to dominate.
- Contract operates just above Tokyo lows, -3 at 137.59. Support at the July 16 low (137.70) has been breached, strengthening the bearish technical theme, switching focus to a cluster of Fibonacci support levels that are some way below prevailing levels.
