USDJPY TECHS: Trend Needle Points North
- RES 4: 151.21 High Mar 28
- RES 3: 150.49 High Apr 2
- RES 2: 149.38 50.0% retracement of the Jan 10 - Apr 22 bear leg
- RES 1: 149.18 High Jul 16
- PRICE: 148.52 @ 16:31 BST Jul 17
- SUP 1: 146.92 Low Jul 16
- SUP 2: 146.08 20-day EMA
- SUP 3: 145.54 50-day EMA
- SUP 4: 144.23 Low Jul 7
A short-term bull cycle in USDJPY remains firmly in place and the recovery from Wednesday’s volatile low reinforces current conditions. The latest rally has resulted in a breach of resistance at 148.03, the Jun 23 high, and a move through key resistance at 148.65, the May 12 high. The break strengthens a bull theme and sights are on 149.38, a Fibonacci retracement. On the downside, support to watch is 145.54, the 50-day EMA.
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US STOCKS: Late Equities Roundup: Risk-Off on Middle East Tension, Will US Join?
- Still off early Monday lows, stocks are retreating late Tuesday as Middle East tensions heat up. Following a series of social media posts around midday, wires said Pres Trump is considering joining Israel on striking Iran. Markets currently await a state Department press briefing.
- Currently, the DJIA trades down 320.42 points (-0.75%) at 42195.11, S&P E-Minis down 51.25 points (-0.84%) at 6038.5, Nasdaq down 185.9 points (-0.9%) at 19515.53.
- A mix of Health Care, Materials and Consumer Discretionary sectors underperformed in the first half, but it was a handful of Tech stocks led laggers: Enphase Energy -22.82%, First Solar -17.95% and AES -9.12% as the Senate looks to end wind & solar tax credits.
- Pharmaceuticals traded weaker as the WH considers cracking down on drug company advertising: Charles River Laboratories -4.56%, Bio-Techne -3.78%, IQVIA Holdings -3.15%, Thermo Fisher Scientific -2.93% and AbbVie -2.73%.
- The Energy sector outperformed as said geopol risk buoyed crude prices (WTI +2.804 at 74.57) in turn supported oil and gas stocks: Valero Energy +2.32%, APA Corp +2.17%, Diamondback Energy +2.15% and Chevron +1.92%.
SWAPS: Spreads Widen As Fed Set To Hold Open Meeting On SLR
The Federal Reserve has provided notice that it will hold an Open Board Meeting at 2pm ET on Wednesday Jun 25, with the subject: "Proposed revisions to the Board’s supplementary leverage ratio standards".
- While there were no more details provided, the announcement appears to have rekindled speculation that the regulatory authorities will soon align on an easing of SLR standards, which is seen to be supportive of demand for Treasuries vs swaps.
- The 10Y SOFR swap spread widened in Treasuries' favor by 0.9bp to -52.6bp. The spread remains tighter than the -50bp level that has prevailed since Treasury market turmoil in April.
- This is unlikely to be the end of the process: Gov Bowman who heads Fed supervision said earlier this month that the Fed will host a conference in July addressing several aspects of large bank regulation including SLR, though in a nod to broader reforms, she says there will also be potential changes discussed at the event including GSIB surcharges, Basel III capital requirements, and stress testing.
US: State Department Press Conference Underway Shortly
US State Department Spokesperson Tammy Bruce is shortly scheduled to brief reporters from the Department of State. LIVESTREAM
- If the presser goes forward, there will be considerable market interest on any details that could flesh out the administration's position on Iran, including the prospect of diplomacy or outreach to Tehran from Secretary of State Marco Rubio.
- US President Donald Trump told reporters aboard Air Force One yesterday, without conviction, that he “may” dispatch either Vice President JD Vance or Middle East envoy Steve Witkoff for talks with Iranian officials.
