IRAN: U.S. Actions In Hormuz Remain A Red Line

• RES 4: 120.55 1.236 proj of the May 18 - 29 - Jun 10 price swing
• RES 3: 119.81 1.000 proj of the May 18 - 29 - Jun 10 price swing 
• RES 2: 119.00 Round number resistance 
• RES 1: 118.83 High May 29 and a bull trigger
• PRICE: 118.56 @ Close Jun 15
• SUP 1: 117.62/116.66 20-day EMA / Low Jun 10       
• SUP 2: 116.09 Low May 20
• SUP 3: 115.68 Low May 18 and a key short-term support 
• SUP 4: 115.19 Low Apr 7

The medium-term trend condition in BTP futures remains bearish and recent gains appear corrective. However, a short-term bull cycle is currently in play, signalling scope for a continuation higher. The latest recovery exposes 118.83, the May 29 high and a short-term bull trigger. A break of this level would open the 119.00 handle next. Initial key support to watch lies at 116.66, the Jun 10 low.

• RES 4: 161.46 1.618 proj of the Jan 27 - Feb  - 12 price swing
• RES 3: 161.00 round number resistance 
• RES 2: 160.72 High Apr 30 and the bull trigger 
• RES 1: 160.59 High Jun 11
• PRICE: 160.30 @ 06:56 BST Jun 16
• SUP 1: 159.71 20-day EMA 
• SUP 2: 159.06/157.32 50-day EMA / Low May 14 
• SUP 3: 156.78 Low May 12
• SUP 4: 156.52 Uptrendline drawn off Apr’ 25 low

USDJPY is trading closer to its recent highs and a bull cycle remains in play for now. Sights are on key resistance at 160.72, the Apr 30 high. A clear break of this hurdle  would strengthen the uptrend. Note that a breach would also cancel an existing  bear threat highlighted by the large bear candle on Apr 30 - it is still possible that the recovery since May 6 is a correction. Initial firm support to monitor is 159.06, the 50-day EMA.

Germany will come to the market today to hold a Bobl auction, while Slovakia will hold the non-competitive round of its SlovGB auction. Germany will return to the market tomorrow, while Spain and France will follow later in the week. In addition, Italy is selling its inaugural retail-only BTP Italia Si. We look for gross issuance of E29.0bln for the week (ex-retail), down from E48.4bln last week.

For the full document with a recap of issuance so far this week, a look ahead to issuance through the remainder of this week and next week and a first round up of expectations for Q3 / H2 issuance plans click here.

• Germany will come to the market today with E5bln of the 2.50% Apr-31 Bobl (ISIN: DE000BU25067) in its first auction of the week.
• Italy is launching its inaugural retail-only BTP Italia Si this week with a 5-year maturity and an ISIN IT0005713539. Books opened yesterday morning and close at 13:00CET Friday (albeit with the possibility of early closing). As with normal BTP Italia, the return will be indexed to Italian inflation.
  • After the first day, books for the issue stand at E3.176bln – an almost identical amount to that seen in last year’s 7-year BTP Italia (which saw books of E3.144bln after the first day). That issue went on to sell E6.533bln.