EU UTILITIES: TenneT NL: Government Guarantee
(TENN; A3/BBB+/NR) Rating actions were previously flagged, triggered by the debt transfer following...
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USD: UK, Japan CPIs, Prelim PMIs and Fed Powell are the focus this Week
- Aside from the NZD (up 0.22%) and the AUD (up 0.11%), the rest of the G10 Currencies are closer to flat against the Dollar, the Yen is the worst performer, albeit by a small 0.16%.
- Overall, all the G10 FX ranges have been fairly contained, even the volatile USDJPY is only trading in 53 pips range.
- The main focus for the Yen this Week is on Friday's Japan CPI.
- The Pound exchanges hand in a tight 26 pips range and Market Participants will have their eyes on the UK Inflation print due on Wednesday.
- Focus this Week is on UK, Japan CPIs, Prelim services PMIs, but ALL EYES are on Powell's speech Friday.
STIR: Flash PMIs Headline This Week's Regional Calendar
This week’s regional calendar is headlined by the August flash PMIs (Thursday). The ECB-dated OIS implied probability of a September cut is less than 5%, and only a much weaker-than-expected set of flash PMI readings (alongside a downward inflation surprise at the end of the month) could put a cut back on the table. Such an outcome appears unlikely. The composite PMI has been slowly trending higher since November 2024, with the April/May tariff-induced uncertainty only having a temporary negative impact on momentum.
- EUR STIRs are little changed from Friday’s closing levels. The 1y ESTR swap rate is currently 1.84%, still below the pre-Liberation Day level of 1.99% but above the 1.72% seen prior to the June ECB decision. The 1y1y forward rate has seen a more notable hawkish move since early June. The chart below shows markets gradually accepting that the easing cycle is close to (or at) its close.
- Outgoing ECB Governing Councillor Holzmann called for more transparency on decisions in an interview with Bloomberg, including expressing support for a Fed-style dot plot. It’s worth noting that such an idea has been rejected by the likes of Chief Economist Lane and Bundesbank President Nagel in recent months.
- ECB Q3 Negotiated Wages are also due this week (Friday). However, the relative importance of this reading has declined in recent quarters since the ECB started publishing its forward-looking wage tracker.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Sep-25 | 1.914 | -1.0 |
| Oct-25 | 1.881 | -4.3 |
| Dec-25 | 1.819 | -10.5 |
| Feb-26 | 1.798 | -12.6 |
| Mar-26 | 1.760 | -16.4 |
| Apr-26 | 1.758 | -16.6 |
| Jun-26 | 1.758 | -16.6 |
| Jul-26 | 1.762 | -16.2 |
| Source: MNI/Bloomberg Finance L.P. | ||
EQUITY TECHS: E-MINI S&P: (U5) Trend Needle Points North
- RES 4: 6600.00 Round number resistance
- RES 3: 6543.43 2.0% 10-dma envelope
- RES 2: 6523.63 1.764 proj of the May 23 - Jun 11 - 23 price swing
- RES 1: 6508.75 High Aug 15 and Alltime High
- PRICE: 6470.25 @ 07:24 BST Aug 18
- SUP 1: 6392.29 20-day EMA
- SUP 2: 6313.25 Low Aug 6
- SUP 3: 6267.88 50-day EMA
- SUP 4: 6239.50 Low Aug 1
The dominant uptrend in S&P E-Minis remains intact and the contract is trading at its recent highs. Moving average studies are in a bull-mode position, highlighting a clear uptrend. A resumption of gains would pave the way for a climb towards 6523.63, a Fibonacci projection. On the downside, supports to watch are; 6392.29, the 20-day EMA, and 6267.88, the 50-day EMA.
