POWER: Uk July Edges Up on Energy Complex, Warmer Temps Limit Gains
The UK July is being supported by price increases in the NBP and UKA markets, with works at the 585MW Hesham 12 nuclear reactor extended to 30 June. However, warmer temperatures heading into next week are limiting gains. Spot costs for 4 June are likely to climb amid a 5GW drop in wind output and higher demand.
- UK Base Power June 25 (BFV) up 0.7% at 74.47 GBP/MWh
- UK Spark Spark M1 (BFV) up 2.1% at -9.36 GBP/MWh
- UK Emissions Dec F1 up 0.4% at 50.29 GBP/MT
- UK NBP JUL 25 up 0.8% at 82.15 GBp/therm
- NBP front-month costs are tracking TTF movements amid ongoing Norwegian maintenance and after Russia-Ukraine talks yielded no major breakthroughs
- UKAs are being supported by gains in EU ETS , with gains in NBP and UK equities also adding some upward pressure.
- UK LNG imports have been nominated at 5.09 mcm/d compared to the five-day flow average of 6.44mcm/d, while gas demand -including power – is forecast at 126.28mcm, below the five-year average of 176.57mcm/d
- Mean temperatures in London have been largely unchanged on the day but were revised higher on 8 June by as much as 0.4C and are expected to be on a general upward trend over 8-17 June.
- Closer in, average temperatures in London are forecast to drop to 15.1C on Wednesday from 15.6C on Tuesday but above the seasonal average of around 14.7C.
- Power demand in the UK is forecast to rise to 28.28GW on Wednesday from 27.9GW on Tuesday, according to Bloomberg.
- Wind output in the UK is forecast at 13.33GW during base load on Wednesday, or a 46% load factor, down from 18.58GW on Tuesday, according to SpotRenewables.
- The 1.4GW North Sea Link power cable between the UK-Norway (NO2) has been curtailed to 700MW over 3-6 June, latest Remit data show.
- The 710 MW Didcot B CCGT power plant is still anticipated to return to the grid on 31 August.
- The 585MW Heysham 12 nuclear unit has extended works to 30 June from 19 June.
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USDCAD TECHS: Hits Bear Trigger, New Cycle Low
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4087 50-day EMA
- RES 1: 1.3906/3935 High Apr 17 / 20-day EMA
- PRICE: 1.3793 @ 17:00 BST May 2
- SUP 1: 1.3760 Low Apr 21 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend set-up in USDCAD deteriorated further Friday, with prices slipping through the bear trigger to narrow the gap with next support. The fresh cycle low reinforces the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3943, the 20-day EMA.
AUDUSD TECHS: Consolidation Phase
- RES 4: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6528 High Nov 29 ‘24
- RES 2: 0.6471 High Dec 9 ‘24
- RES 1: 0.6470 High May 2
- PRICE: 0.6445 @ 16:59 BST May 2
- SUP 1: 0.6344/6316 Low Apr 24 / 50-day EMA
- SUP 2: 0.6181 Low Apr 11
- SUP 3: 0.6116 Low Apr 10
- SUP 4: 0.5915 Low Apr 9 and key support
AUDUSD remains inside a consolidation phase, having traded either side of the 0.6400 level for 10 consecutive sessions. The underlying trend remains bullish and the pair is trading close to recent highs. Price has recently breached a key resistance at 0.6409, the Dec 9 ‘24 high. This breach reinforces bullish conditions and signals scope for a continuation higher near-term. Sights are on 0.6471 next, the Dec 9 2024 high. Initial key support to monitor is 0.6316, the 50-day EMA. A clear break of this EMA would be a concern for bulls.
US TSYS: Rates Retreat, Sentiment Improved Though Trade Risk Remains
- Treasuries look to finish near late Friday session lows after trading firmer on the open, higher than expected Nonfarm payrolls at 177k (sa, cons 138k) of which private contributed 167k (sa, cons 125k) triggered the early reversal.
- However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs -48k two-month revision).
- Stocks are back near four week highs - pre-"Liberation Day" levels as hopes of some trade deal being made improved sentiment.
- The Wall Street Journal reports that "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start." The Journal notes that "discussions remain fluid" and China "would like to see some softening of stance from President Trump".
- Currently, the Jun'25 10Y contract trades -20 at 111-07.5 vs 111-02 low -- initial technical support (50-dma) followed by 110-16.5/109-08 (Low Apr 22 / 11 and the bear trigger). Curves bear flattened, 2s10s -3.480 at 48.002, 5s30s -4.911 at 86.807.
