EURJPY TECHS: Trend Structure Remains Bearish
- RES 4: 161.78 High Dec 1
- RES 3: 159.93 High Dec 4
- RES 2: 158.67 High Dec 12
- RES 1: 158.62 50-day EMA
- PRICE: 157.57@ 06:50 GMT Dec 27
- SUP 1: 155.39/153.23 Low Dec 19 / 7 and the bear trigger
- SUP 2: 152.24 3.764 proj of the Nov 16 - 21 - 27 price swing
- SUP 3: 151.42 Low Jul 28 and a key support
- SUP 4: 150.92 Low Jun 14
EURJPY traded sharply higher on Dec 19 breaching resistance at 157.68, the Dec 11 high. The next key hurdle to watch is 158.67, the Dec 12 high. Clearance of this level would signal a short-term reversal. While 158.67 remains intact, recent gains appear to be a correction and trend signals remain bearish. A continuation lower and a break of 153.23, the Dec 7 low and bear trigger, would resume the downtrend.
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EUROZONE ISSUANCE: EGB Supply - W/C 27 November, 2023
The EU, Italy and Germany are due to issue in the week ahead. We pencil in gross nominal issuance of E14.6bln, up from E9.5bln this week.
- The EU will kick off issuance for the week today with its last EU-bond auction of 2023. Up to E2bln of each of the 4-year 2.00% Oct-27 EU-bond (ISIN: EU000A3K4DS6) and the 10-year 2.75% Feb-33 Green EU-bond (ISIN: EU000A3K4DW8) will be on offer. Note that the European Commission said that in 2024 there would be a “very heavy pipeline” of NGEU issuance after the slowdown seen in H2-24 issuance. See our Policy Team’s brief here.
- Wednesday will see Italy come to the market to hold its last 5/10-year BTP and CCTeu auction of the year. On offer will be E2.5-3.0bln of the on-the-run 5-year 4.10% Feb-29 BTP (ISIN: IT0005566408), E3.0-3.5bln of the on-the-run 10-year 4.20% Mar-34 BTP (ISIN: IT0005560948) and E0.75-1.0bln of the 0.50% Apr-26 CCTeu (ISIN: IT0005428617).
- Wednesday will also see Germany hold its last 10-year Bund auction of 2023 with E3.5bln of the 2.60% Aug-33 Bund (ISIN: DE000BU2Z015) on offer.
NET NOMINAL FLOWS: The week ahead sees redemptions of E19.7bln – E13.1bln of an Italian BTP Short-Term and E6.6bln of a Spanish Bono-i. Coupon payments for the week total E7.4bln: E2.6bln Spanish, E2.5bln French and E2.2bln Italian. This leaves net flows for the week at an estimated negative E12.5bln versus negative E5.2bln this week.
GILT TECHS: (Z3) Watching Support
- RES 4: 99.73 Low Apr 19 (cont)
- RES 3: 99.26 50.0% of the Mar 20 - Oct 23 downleg (cont)
- RES 2: 98.98 High May 22 (cont)
- RES 1: 96.96/97.99 High Nov 23 / 17
- PRICE: 95.40 @ Close Nov 24
- SUP 1: 94.86 50-day EMA
- SUP 2: 94.58 Low Nov 13 and a key support
- SUP 3: 93.44 Low Nov 2
- SUP 4: 92.63 Low Nov 1
Gilt futures traded lower last week. The pullback is considered corrective - for now - and a bull cycle remains in play. Key short-term support has been defined at 94.58, the Nov 13 low, and initial support lies at 94.86, the 50-day EMA. A break of 94.58 would undermine a bullish theme and instead signal scope for a deeper retracement. Key resistance is at 97.99, the Nov 17 high. Clearance of this level would resume the uptrend.
EUROZONE T-BILL ISSUANCE: W/C November 27, 2023
Germany, France, Austria, Italy, and Greece are all due to sell bills this week. We expect issuance to be E21.3bln in first round operations, up from E16.5bln last week.
- This morning, Germany will look to sell E2bln of the 3-month Mar 20, 2024 bubill and E2bln of the 9-month Sep 18, 2024 bubill.
- This afternoon, France will come to the market to sell up to E6.7bln of 5/13/22/48-week BTFs: E0-400mln of the 5-week Jan 4, 2024 BTF, E2.6-3.0bln of the new 13-week Feb 28, 2024 BTF, E1.3-1.7bln of the 22-week May 2, 2024 BTF, and E1.2-1.6bln of the 48-week Oct 30, 2024 BTF.
- Tomorrow, Austria will look to sell E750mln of the 2-month Jan 25, 2024 ATB and E1.75bln of the 3-month Feb 29, 2024 Green ATB.
- Also tomorrow, Italy will offer E7.5bln of the new 6-month May 31, 2024 BOT.
- On Wednesday, Greece will conclude issuance for the week, selling E625mln of the new 26-week May 31, 2024 GTB.
