USDCAD TECHS: Through Bear Trigger
- RES 4: 1.3386/87 50.0% of the May 26 - Jun 27 downleg / High Jul 7
- RES 3: 1.3370 50-dma
- RES 2: 1.3304 High Jul 10
- RES 1: 1.3266 20-day EMA
- PRICE: 1.3121 @ 16:11 BST Jul 13
- SUP 1: 1.3114 1.0% 10-dma envelope
- SUP 2: 1.3107 Low Jul 13
- SUP 3: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 4: 1.3032 1.764 proj of the Apr 28 - May 8 - May 26 price swing
USDCAD accelerated losses on the move through the bear trigger at 1.3117. This shifts the short- and medium-term picture more bearish, opening losses toward 1.3084 initially as well as 1.3032. The 1.0% 10-dma envelope has been pierced for the first time since mid-June, signalling the extent of the current downside momentum. The bearish engulfing candle on Jul 7 continues to highlight a reversal. Initial firm resistance is seen at 1.3266, the 20-day EMA.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Key Support Gives Way
- RES 4: 1.3668 High Apr 28 and a key resistance
- RES 3: 1.3585 High Jun 1
- RES 2: 1.3493 50-day EMA
- RES 1: 1.3457 20-day EMA
- PRICE: 1.3289 @ 16:14 BST Jun 13
- SUP 1: 1.3286 Low Jun 13
- SUP 3: 1.3275 Low Feb 14
- SUP 2: 1.3269 1.0% 10-dma envelope
- SUP 4: 1.3187 2.0% 10-dma envelope
USDCAD broke lower Tuesday, taking out key support at the mid-April lows of 1.3302. This marks down the near-term outlook, opening 1.3275 - the Feb 14 low - and vol band support undercutting at 1.3269. Clearance herewould strengthen bearish conditions and open 1.3262, the Feb 2 low. On the upside, initial firm resistance is at 1.3457, the 20-day EMA. A break of this level is required to ease bearish pressure.
US STOCKS: Gains Stall After Post-CPI Push But Shrug Off Jump In Real Yields
- ESA at 4412.75 has pulled back slightly off session highs and newfound initial resistance at 4423.25 but still sees solid gains after the CPI report helped breach the round 4400 tested prior to the data.
- The continued push higher has opened a string of resistance levels running off projections based on the May 4-19-24 price swing, with 4427.19 (1.618) and 4452.42 (1.764) next ahead.
- The 0.6% increase on the day is decent from a macro perspective considering a 7.5bp increase in 10Y Tsy real yields.
- SPX is also +0.7%, and whilst banks (+1%) and energy (+0.6%) partly bounce back after yesterday’s underperformance, it’s led by materials (+2.3%). The latter is led by metals & mining (+3.8%) as part of sizeable gains for commodity producers generally after iron ore pushed higher overnight.
- Away from SPX, the Nasdaq 100 trades broadly in line whilst the Dow Jones lags with +0.3%, as does the TSX (+0.4%) north of the border despite strong energy gains on the day.
US TSYS: Ending A Mixed Session Notably Cheaper Despite Softer CPI Details
- Cash Tsys have seen a significantly mixed session, with a sharp rally on the CPI report before fully reversing the move and them plumbing new lows since March 10 after brief respite ahead of and only shortly after the solid 30Y auction.
- Headline drivers have been relatively light but it follows a substantial 26bp increase in 2Y Gilt yields ahead strong labour data sent BoE rate expectations surging along with Russia mulling quitting the safe corridor grain deal for Black Sea ports, with clearance of key support for TY helping extend lows.
- Coming on the eve of the FOMC decision, the end result is yields currently 10-11bps higher on the day for 2-7Y tenors, with the 2Y at the high end of its wide 4.49-4.704% range. 10s only modestly outperform with +9.3bps whilst the very long end more clearly outperforms at +5bps after the auction traded through with decent internals.
- TYU3 at 112-24 off a low of 112-20+ easily cleared key support at 112-29+ to open 112-16 (76.4% retrace of Mar 2 – May 4 rally).
- FOMC-dated OIS doesn’t shake off the post-CPI hit for near-term meetings with just +2bps for tomorrow and a cumulative +17bps for July (-5bps since the data) but the Dec’23 has continued to increase to 5.13% for +6bps on the day and just 15bp of cuts from the 5.28% terminal now seen in September.
- Tomorrow sees PPI land with the usual implications for core PCE inflation, before of course the FOMC decision at 1400ET.
