RENEWABLES: UK Morning Wind Forecast

Gilts gap lower at the open.

• Broader risk-positive sentiment a factor following the tentative movement towards a reopening of the U.S. government.
• Local fiscal issues also remain in focus given some disagreement within the Labour cabinet re: the viability of breaking manifesto tax pledges.
• Futures as low as 92.75 before a recovery to 92.85.
• Contract through support at the 20-day EMA (92.98), signalling scope for an extension of the recent bearish correction. Next support located at the October 20 low (92.38).
• Yields 2.0-3.5bp higher, curve steeper.
• 2s10s set for the highest close since October 14.
• BoE’s Lombardelli appears today, but she may not speak on monetary policy as she will give opening remarks and chair a panel at the BoE & Bank of Ghana Pan-African Central Bank Governors’ conference.
• Labour market data (due tomorrow) headlines this week’s UK calendar.

• RES 4: 1.4274 High Apr 9  
• RES 3: 1.4200 Round number resistance
• RES 2: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
• RES 1: 1.4147 Channel top drawn from Jul 23 low 
• PRICE: 1.4012 @ 08:10 GMT Nov 10
• SUP 1: 1.4011 Intraday low 
• SUP 2: 1.3952 50-day EMA 
• SUP 3: 1.3888 Low Oct 29 and a key support  
• SUP 4: 1.3870 Bull channel base drawn from the Jul 23 low

Friday’s move lower in USDCAD highlights a potential bearish development and a possible reversal of the recent bull cycle. Last week’s gains stalled at the top of a bull channel, currently at 1.4147. The bull channel is drawn from the Jul 23 low. The pair has today breached support at the 20-day EMA, at 1.4021. This exposes the 50-day EMA at 1.3952. For bulls, a break of the channel top would confirm a resumption of the uptrend.

• RES 4: 0.6707 High Sep 17 and a bull trigger
• RES 3: 0.6663 2.0% 10-dma Envelope
• RES 2: 0.6644 76.4% retracement of the Sep-Oct bear leg  
• RES 1: 0.6537/0.6618 50-day EMA / High Oct 29
• PRICE: 0.6531 @ 08:05 GMT Nov 10 
• SUP 1: 0.6459 Low Nov 5
• SUP 2: 0.6440 Low Oct 14 and key support 
• SUP 3: 0.6415 Low Aug 21 / 22 and a bear trigger
• SUP 4: 0.6373 Low Jun 23   

Despite today’s early gains, a bearish short-term tone in AUDUSD remains intact. The recent breach of the 50-day EMA undermines a recent bullish theme. This has exposed the next key support at 0.6440, the Oct 14 low. Key resistance and a short-term bull trigger is at 0.6618, the Oct 29 high. Initial resistance to monitor is at 0.6537, the 50-day EMA. A clear break of the average would strengthen a bullish case.