USDCAD TECHS: Trend Needle Points South

Monday's US rates/bond options flow included:

• TYU5 105p, bought for '05 in 5k
• SFRM5 95.68pn sold at 1.75 in 6k (on Block).
• SFRN5 96.75 calls bought for 1.25 in 20k
• SFRM5 96.62c bought for 0.25 in 30k.
• SFRM5 96.00c (x2), with 96.31c (x3), bought as a strip for 1.75 in 4.5k.
• SFRM5 95.81/95.75ps, traded for 6 in 10k total (8k was done on Block).
• SFRZ5 95.75/95.62ps 1x2, traded flat in 2k.
• SFRU5 95.87/95.75/95.68/95.56p condor, sold at 5.75 in 2k and 5.625 in 10k.
• 0QM5/2QM5 96.87c spread, traded for -1 in 1.5k.

• 0NQ5 96.30/96.50/96.70c fly, bought for 3.75 in 4k.

  
  
  
   

• RES 4: 0.6603 High Nov 11 ‘24  
• RES 3: 0.6582 High Nov 12 ‘24
• RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 1: 0.6537 High May 26  
• PRICE: 0.6493 @ 16:38 BST Jun 2 
• SUP 1: 0.6396/85 2.0% Lower 10-day Bollinger Band / 50-day EMA 
• SUP 2: 0.6357 Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

AUDUSD trend signals remain bullish and the pair continues to trade closer to its recent highs. Key support lies at 0.6385, the 50-day EMA. A clear break of this average is required to signal a potential short-term reversal. The pair has recently cleared a key short-term resistance at 0.6515, the May 7 high. This confirms a resumption of the uptrend. A continuation higher would open 0.6550, a Fibonacci retracement.  

Treasuries gave back some of Friday's month end gains on Monday, with the cash curve lightly bear steepening.

• Yields ticked up at the open from Friday's multi-week lows, with a prevailing negative tone on US assets (weaker USD and equities) following Friday's post-close announcement by President Trump that the administration would double steel and aluminum tariffs.
• Most of the session's data was on the soft side of expectations if somewhat stagflationary, with May's ISM manufacturing below-expected (with weak sub-components, albeit prices paid in-line), and construction spending contracting again in April.
• But reaction was muted and yields would head to session highs and stay there after Atlanta Fed GDPNow for Q2 was upgraded to 4.6% (from 3.8%) and equities turned positive into the cash close. Fed speakers (Logan, Goolsbee, Powell) likewise saw no discernable reaction.
• Yields were set to close near the highs: the 2-Yr yield is up 4.3bps at 3.9407%, 5-Yr is up 5.4bps at 4.0156%, 10-Yr is up 5.9bps at 4.4596%, and 30-Yr is up 6.3bps at 4.9935%.
• Sep 10-Yr futures (TY) are down 8.5/32  at 110-15.5 (L: 110-13.5 / H: 110-30), having fallen just through Friday's lows in orderly fashion.
• Tuesday's calendar includes factory orders and JOLTS data, with an appearance by Fed's Cook among other speakers, while the week's focus is Friday's employment report for May.