SCHATZ TECHS: (U5) Resistance Remains Intact

• RES 4: 107.360 High Jul 22 and a key resistance  
• RES 3: 107.267 50-day EMA
• RES 2: 107.233 20-day EMA 
• RES 1: 107.155 Low Jul 28
• PRICE: 107.100 @ 05:58 BST Jul 30
• SUP 1: 107.010 Low Jul 25 and a bear trigger 
• SUP 2: 107.993 1.500 proj of the Jul 7 - 11 - 22 price swing 
• SUP 3: 106.964 1.618 proj of the Jul 7 - 11 - 22 price swing
• SUP 4: 106.928 1.764 proj of the Jul 7 - 11 - 22 price swing

Schatz futures traded sharply lower last week resulting in a break of key short-term support at 107.120, the Jul 11 low and a bear trigger. However, the contract has recovered from the Jul 25 low and recent price patterns highlight a potential base. A continuation higher would expose resistance at the 20-day EMA, at 107.221. The 50-day EMA is at 107.267. On the downside, key support and the bear trigger has been defined at 107.010, the Jul 25 low. 

RBA-dated OIS pricing is 3-6bps softer across meetings after today’s Q2 CPI data. 

• Australia's Q2 trimmed mean CPI printed only 0.1pp above the RBA's May Q2 forecast, which with the economy developing broadly in line with expectations since the July meeting should allow it to ease 25bp on August 12 when it also releases its updated outlook. Trimmed mean rose 0.6% q/q to be up 2.7% y/y, a moderation from Q1's 0.7% & 2.9%.
• A 25bp rate cut in August is given a 99% probability, with a cumulative 64bps of easing priced by year-end (based on an effective cash rate of 3.84%). 

Figure 1: RBA-Dated OIS – Current Vs. Pre-CPI

Source: Bloomberg Finance LP / MNI