BUND TECHS: (U5) Tops 50-day EMA
- RES 4: 131.33 High Jun 20
- RES 3: 130.85 61.8% retracement of the Jun 13 - Jul 14 bear leg
- RES 2: 130.76 High Jul 22
- RES 1: 130.60 High Aug 5
- PRICE: 130.14 @ 07:09 BST Aug 8
- SUP 1: 128.84 Low Jul 25 and the bear trigger
- SUP 2: 128.40 Low Apr 9
- SUP 3: 128.19 Low Mar 27 (cont)
- SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)
Bund futures traded sharply higher to close last week - and the constructive theme persists. While prices have faded since, the 50-day EMA of 130.12 has been pierced, reinforcing a bullish theme. A continuation higher would open 130.76, the Jul 22 high. The sell-off on Jul 25, resulted in a test of the base of a 3.5-month range at the 129.00 handle. Price has recovered and this key support remains intact, for now. A hammer candle formation on Jul 25 followed by a bullish engulfing candle on Jul 28 signals a potential reversal. Key support to watch is 128.84, the Jul 25 low.
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EUROZONE ISSUANCE: EGB Supply Daily
Germany and Portugal look to hold auctions today while Italy looks to come to the market Friday. Already this week, the EU has held a syndication, while the Netherlands, Austria and Germany held auctions. We pencil in estimated gross issuance for the week of E30.2bln, up from E29.1bln last week.
- Germany will return to the market today to hold a 15-year Bund auction. E1.5bln of the on-the-run long 15-year 2.60% May-41 Bund ISIN (DE000BU2F009) will be on offer alongside E1.0bln of the 2.50% Jul-44 Bund (ISIN: DE0001135481).
- Portugal will also come to the market today with a combined E1.00-1.25bln of the long 6-year 0.30% Oct-31 OT (ISIN: PTOTEOOE0033) on offer alongside the off-the-run short 30-year 1.00% Apr-52 OT (ISIN: PTOTECOE0037).
- Italy will look to hold a 3/7/15+ year BTP auction on Friday, selling E3.25-3.50bln of the new long 3-year 2.35% Jan-29 BTP (ISIN TBA; the launch was as expected) alongside a reopening of the on-the-run 7-year 3.25% Jul-32 BTP (ISIN: IT0005647265) for E3.0-3.5bln and E1.25-1.75bln of the on-the-run 15-year 3.85% Oct-40 BTP (ISIN: IT0005635583).
- The launch of a new 3-year BTP was expected at this auction. This will also be the first reopening of the 15-year 3.85% Oct-40 BTP since its syndicated launch for E13.0bln in February.
EURGBP TECHS: Bull Flag
- RES 4: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 3: 0.8738 High Apr 11 high and a key resistance
- RES 2: 0.8694 High Apr 14
- RES 1: 0.8670 High Jul 02
- PRICE: 0.8621 @ 06:48 BST Jul 9
- SUP 1: 0.8597 Low Jul 7
- SUP 2: 0.8562/8511 20- and 50-day EMA values
- SUP 3: 0.8459 Low Jun 11
- SUP 4: 0.8407 Low Jun 4
The trend condition in EURGBP remains bullish and the cross is holding on to the bulk of its recent gains. Recent activity appears to be a bull flag formation - a bullish continuation pattern. 0.8648, 76.4% of the Apr 11 - May 29 downleg, has been pierced. A continuation higher and a confirmation of the flag would strengthen bullish conditions and open 0.8738, the Apr 11 high and a key resistance. Support to watch lies at 0.8562, the 20-day EMA.
SCHATZ TECHS: (U5) Monitoring Support
- RES 4: 107.690 High Apr 30
- RES 3: 107.610 High May 23 and a key near-term resistance
- RES 2: 107.430/475 High Jun 13 / High May 27
- RES 1: 107.277/365 20-day EMA / High Jul 7
- PRICE: 107.215 @ 06:29 BST Jul 9
- SUP 1: 107.195/180 Low Jun 6 / 23
- SUP 2: 107.125 Low May 12 and a key support
- SUP 3: 107.000 Round number support
- SUP 4: 106.890 2.000 proj of the May 23 - 29 - 30 price swing
Schatz futures have traded lower this week but for now remain inside a range. Support to watch is 107.195, the Jun 6 low. It has been pierced, a clear break of it would reinstate a bearish threat and signal scope for an extension towards 107.125, the May 12 low. On the upside, clearance of 107.470, the May 30 high, is required to strengthen a bullish condition. Initial firm resistance is 107.365, the Jun 7 high.
