UK DATA: Unrounded CPI
- Headline 3.36%Y/Y in May (3.53% in April)
- Core 3.54%Y/Y in May (3.83% in April)
- Services 4.68%Y/Y in May (5.42% in April)
- NEIG 1.57%Y/Y in May (1.08% in April)
- Energy -1.68%Y/Y in May (-0.94% in April)
- Food, alcohol, tobacco 4.68%Y/Y in May (4.01% in April)
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GILT TECHS: (M5) Resistance Remains Intact
- RES 4: 93.59 High May 8
- RES 3: 93.00 Round number resistance
- RES 2: 92.28 20-day EMA
- RES 1: 92.03 High May 16
- PRICE: 91.73 @ Close May 16
- SUP 1: 90.96 Low May 15 and the bear trigger
- SUP 2: 90.92 76.4% retracement of the Apr 9 - May 2 rally
- SUP 3: 90.47 Low Apr 11
- SUP 4: 89.99 Low Apr 9 and a key support
Gilt futures traded sharply lower last Wednesday, extending the current bear cycle. The impulsive sell-off strengthens a bearish theme. The move down exposes 90.92, 76.4% of the Apr 9 - May 2 rally. A break of this level would strengthen the bearish condition and open 90.47, the Apr 11 low. Note that the strong rally from last Thursday’s low does ease bearish pressure. Resistance to watch is at 92.28, the 20-day EMA. A break would be bullish.
RATINGS: U.S. Lost Aaa Status at Moody’s on Friday, Some Tweaks Elsewhere
Sovereign rating reviews of note from after hours on Friday include:
- Fitch affirmed Greece at BBB-, Outlook revised to Positive
- Fitch affirmed Slovakia at A-; Outlook Stable
- Moody's downgraded the United States of America to Aa1 from Aaa, outlook changed to stable
- S&P affirmed South Africa at BB-; Outlook Positive
- Morningstar DBRS confirmed the United Kingdom at AA, Stable Trend
- Scope upgraded Slovenia to A+, Outlook Stable
USDJPY TECHS: Testing Support At The 20-Day EMA
- RES 4: 150.49 High Apr 2
- RES 3: 149.28 High Apr 3
- RES 2: 148.54/65 76.4% of Mar 28 - Apr 22 bear leg / High May 12
- RES 1: 146.29 50-day EMA
- PRICE: 145.23 @ 19:39 BST May 16
- SUP 1: 144.81/143.45 Intraday low / Low May 8
- SUP 2: 142.36 Low May 6
- SUP 3: 141.97 Low Apr 29
- SUP 4: 139.89 Low Apr 22 and a bear trigger
USDJPY continues to trade below the May 12 high and the pair maintains a softer tone. The latest pullback underpins the view that gains since Apr 22 appear corrective. A stronger reversal lower would refocus attention on 142.36, the May 6 low. First support to watch is 145.21, the 20-day EMA. It has been pierced, a clear break would strengthen a bearish theme. Key short-term resistance has been defined at 148.65, the May 12 high.
