GBPUSD TECHS: Trading Above Support
- RES 4: 1.2667 High Dec 19
- RES 3: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 bear leg
- RES 2: 1.2576 High Jan 7
- RES 1: 1.2550 High Feb 5
- PRICE: 1.2394 @ 16:45 GMT Feb 7
- SUP 1: 1.2361/2249 Low Jan 6 / 3
- SUP 2: 1.2161 Low Jan 17 / 20
- SUP 3: 1.2100 Low Jan 10 and the bear trigger
- SUP 4: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
GBPUSD remains below Wednesday’s high. Gains earlier this week resulted in a breach of the 20-day EMA and delivered a print above 1.2500, the 50-day EMA, and 1.2523, the Jan 27 high. A continuation higher would signal scope for a move towards 1.2610, a Fibonacci retracement. On the downside, key short-term support to watch has been defined at 1.2249, the Jan 3 low. Clearance of this level would instead highlight a reversal.
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US: FED Reverse Repo Operation
RRP usage continues to recede, $185.144B this afternoon from $208.296 Tuesday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties slips to 48 from 56.
US: Deficit Hawks Warn Against Debt Limit Hike Ahead Of Key Trump Meetings
Axios reports that a handful of deficit hawks from the House Freedom Caucus could sink the entire Republican agenda if House Speaker Mike Johnson (R-LA) follows through with plans to attach a debt ceiling hike to a huge multi-item reconciliation bill.
- Axios notes that Reps. Andy Biggs (R-AZ) and Tim Burchett (R-TN) "have never voted to increase the debt ceiling," with Rep. Rich McCormick (R-GA) noting: "I heard that there are three people that will not vote for a debt ceiling lift, which already kills the bill,"
- On the other side of the ledger, a group of blue-state moderate Republicans have vowed to oppose any reconciliation package that doesn’t include Trump’s pledge to lift the cap on State and Local Tax deductions (SALT).
- Rep. Mike Lawler (R-NY) told reporters yesterday he's "been very clear from the start that I will not support a tax bill that does not lift the [SALT] cap". Of course, the inclusion of a SALT hike is likely to add hundreds of billions of dollars to the deficit and risk a more severe conservative rebellion.
- President-elect Donald Trump is scheduled to meet with Senate Republicans today at 18:00 ET 23:00 GMT and then with House Republicans on Saturday to determine final strategy for legislation.
- Punchbowl News notes that oscillation over strategy has put the GOP behind schedule for an incoming administration: "Eight years ago, the Senate had already passed a budget resolution — the first step in the process — before Trump even took office.”
US TSYS/SUPPLY: Review: 30Y Bond Re-Open: Small Stop
Treasury futures climbing higher, USH5 currently 112-07 (+2) after the $22B 30Y auction reopen (912810UE6) stops .7bp through: 4.913% high yield vs. 4.920% WI; 2.52x bid-to-cover vs. 2.39x in the prior month.
- Peripheral measures has indirect take-up 66.63% vs. 66.53% prior; direct bidder take-up 20.71% vs. 19.10% prior; primary dealer take-up 12.66% vs. 14.37% prior.
- The next 30Y auction is tentatively scheduled for February 13.
