US 10YR FUTURE TECHS: (U5) Support Remains Intact
Jul-24 10:19
- RES 4: 112-15 61.8% retracement of the Apr 7 - 11 sell-off
- RES 3: 112-12+ High Jul 1 and a bull trigger
- RES 2: 111-28 High Jul 3
- RES 1: 111-14+ High Jul 22
- PRICE: 110-30 @ 11:08 BST Jul 24
- SUP 1: 110-24/08+ Low Jul 21 / Low Jul 14 & 16
- SUP 2: 110-03 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 3: 109-28 Low Jun 6 and 11
- SUP 4: 109.25 Low May 27
Recent gains in Treasury futures resulted in a break of the 20-day EMA, strengthening the recovery. Note too that resistance at 111-13+, the Jul 10 high, has been pierced. A clear break of this hurdle would highlight a stronger reversal. This would open 111-28, the Jul 3 high. While prices have retraced from their highs , key support remains intact at 110-08+, the Jul 14 and 16 low. A move through this support would reinstate a bearish theme.
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CANADA: EURCAD Approaching Key Pandemic Pivot Around 1.6000 [2/2]
Jun-24 10:09
- However, a reading in line with or below expectations would keep the door open to a cut amid a pullback in the 3mma annualized rate in trim/median average to 3.1/3.2% from 3.4% prior. A key beneficiary of any follow through Canadian dollar weakness would likely be EURCAD, given the ongoing resilience for the single currency and the close proximity to key medium-term technical parameters for the cross.
- EURCAD's Monday close was the second highest of the year, and puts spot within range of heavy layered resistance between 1.5960 - 1.5990, daily highs dating back to the covid pandemic in 2020. Clearance of this area and the psychological 1.6000 mark would place the cross at levels last seen in 2018 and target 1.6153, the 2018 highs.
- Deutsche Bank have stated that CAD is one of their less preferred currencies – their forecasts for G10 have only the dollar and CHF performing worse, and in Blueprint they recommend long EURCAD.
- Aside from the data, the now-prolonged trade talks with the US remain another key driver, on which Carney stated his government are still focused on after the most recent call with US president Trump. Separately, the EU and Canada signed a security and defense agreement on Monday, meant to be a step in a New EU-Canada Strategic Partnership of the Future.
EQUITIES: EU Bank rolling Put Option
Jun-24 10:07
SX7E (18th July vs 15th Aug) 195p, bought the Aug for 2.05 in 6k (rolling Put).
CANADA: USDCAD Primary Downtrend Intact, 50-Day EMA Resistance Holds [1/2]
Jun-24 10:06
- The sharp moves/reversals for both oil markets and the dollar on Monday have provided offsetting forces for the USDCAD exchange rate, keeping the pair in a relatively confined 88 pip range this week. The spike to 1.3798 appears technically corrective, and the primary downtrend is bolstered by the 50-day EMA capping the topside for now. The pair has not been above this average since early April.
- Continued dollar weakness would place attention back on key support and the bear trigger, which has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend.
- At 1330BST (0830ET) we get the first of two monthly CPI readings ahead of the next BOC decision on July 30. Consensus for the Y/Y headline reading is 1.7%, with a slight upward skew, while the average of the BOC's preferred trim and median core measures is seen coming in at 3.0% Y/Y (3.15% unrounded in April), the highest in over a year.
- Another upside surprise in core measures could see a retracement of recent cut repricing (last 10bp, vs 6bp last week), with analysts remaining split on July easing expectations. This would likely reinforce the underlying bearish theme for USDCAD.
