COMMODITIES: Trend Condition in Gold Unchanged and Bullish
The current bearish trend condition in WTI futures remains intact and this week’s fresh short-term cycle lows reinforce current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.68, the 50-day EMA. The trend condition in Gold is unchanged, it remains bullish and the recent pullback appears to have been a correction. A stronger rally would refocus attention on $2962.2, a Fibonacci projection. This would also open the $3000.0 handle. On the downside, a resumption of weakness would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2820.3. The 50-day average marks a key support.
- WTI Crude up $0.75 or +1.13% at $67.19
- Natural Gas down $0.06 or -1.49% at $4.244
- Gold spot up $8.51 or +0.29% at $2921.49
- Copper down $2.35 or -0.49% at $478.4
- Silver down $0 or 0% at $32.6325
- Platinum up $4.93 or +0.51% at $973.22
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EGBS: OATs Continue To Benefit From Reduction In Short-Term French Risks
The reduction in short-term French political risk premium continues to filter into the 10-Year SPGB/OAT/PGB fly after the French Socialist Party indicated that it would not support a censure motion against PM Bayrou (vote scheduled for later today).
- The structure is testing the November 21 closing level at -37.1bp, ~19bp off cycle/’25 closing lows.
- While the short-term risks have clearly lessened on that development, medium-term fiscal and political headwinds remain intact, with difficult discussions surrounding pensions and further fiscal tightening needing to be addressed on the coming months.
- As such, Commerzbank continue to suggest that “an ongoing OAT recovery should be used to add to structural shorts in the semi-core complex vs. Iberia.”
Fig. 1: 10-Year SPGB/OAT/PGB Fly (bp)
Source: MNI - Market News/Bloomberg
STIR: SFRH6/U6/H7 Fly Lifted
SFRH6/U6/H7 fly paper paid -3.5 on ~4.1K. ~6.4K lots traded at that price in total on the session.
FOREX: FX OPTION EXPIRY
Of note:
USDJPY 2.07bn at 153.15/153.25.
USDCAD ~1bn at 1.4240.
EURUSD 5.37bn at 1.0400/1.0450 (thu).
GBPUSD 1.01bn at 1.2550 (thu).
USDCAD 1.01bn at 1.4310 (fri).
EURUSD 3.5bn at 1.0450/1.0455 (mon).
EURUSD 2.04bn at 1.0450 (tue).
- EURUSD: 1.0375 (230mln), 1.0400 (720mln), 1.0430 (473mln), 1.0475 (326mln), 1.0500 (1.35bn).
- USDJPY: 153.15 (965mln), 153.25 (1.11bn).
- USDCAD: 1.4240 (954mln).
- AUDUSD: 0.6260 (364mln).
- NZDUSD: 0.5700 (379mln).
