JAPAN: Takaichi Leads Opinion Polling, According to Kyodo

• Long end Germany Buxl lead the bounce to keep moving away from Yesterday's low.
• The German 5/30s printed a 98.28 high on the Cash Open, but now seeing some flattening bias, falling towards 96.00.
• That part of the Curve was trading around 94.57, when the 30yr Yield printed a 14yr High.
• The 30yr Yield is fading back to the July high it broke Yesterday, Buxl futures was trading around 115.38.

(Chart source: MNI/Bloomberg Finance LLP).

Gilts follow peers higher at the open, with oil a little off overnight lows.

• Futures as high as 91.95.
• Bears have countered recent bullish technical developments.
• They look to yesterday’s low (91.51) as their first target, which protects the Aug 1 low (91.44) and July 18 low/bear trigger (91.08).
• Conversely, bulls need to close yesterday’s opening gap lower (~92.25) before switching focus higher.
• Yields 2-3bp lower across the curve, modest flattening noted.
• 2s10s and 5s30s remain above 70bp and 140bp respectively, after yesterday’s steepening resulted in closes above. Intraday ’25 highs on both curves (84.6bp & 147.2bp) remain unchallenged.
• Fiscal issues continue to dominate local headlines. Guardian sources have reported that “the Treasury is looking at ways to raise more money from inheritance tax amid growing pressure on the country’s finances ahead of the autumn budget”.
• Curve steepening risks remain intact, albeit with crowded positioning and a more activist approach from policymakers when it comes to managing spikes higher in long end yields posing risks to that idea.

• RES 4: 1.4111 High Apr 10  
• RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg 
• RES 2: 1.3920 High May 21
• RES 1: 1.3879 High Aug 1
• PRICE: 1.3759 @ 08:13 BST Aug 13
• 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

USDCAD remains subdued, despite the shallow bounce Friday feeding through to further gains on Monday. The reversal off highs on Tuesday affirms this theme. The pair remains notably lower on the week on the back of last Friday’s USD weakness. Initial firm support has been breached at the 1.3737 20-day EMA, a break below which would resume the correction off the early August high at 1.3879. On the recent run higher, price traded through the 50-day EMA at 1.3746, which aided the rally. This week’s price action, however, has cancelled that bullish threat and returned focus lower. The 100-dma becomes a key pivot point at 1.3814 last.