FED: US TSY TO SELL $73.000 BLN 26W BILL SEP 29, SETTLE OCT 02

• US TSY TO SELL $65.000 BLN 17W BILL AUG 27, SETTLE SEP 02

Tsy futures are just off the top end of a narrow session range (TUU5 +2.38 at 103-29.75 vs. 103-30 high); TYU5 currently +4 at 112-03 vs. 112-03.5 low) ahead of the $69B 2Y note auction (91282CNV9) at 1300ET, WI is currently running at 3.659%, 26.1bp rich to last month's stop.

• July auction recap: Tsy futures gained slightly but remain offered (2Y Tsy near session low 103-17.75, yield at 3.9319%) after the latest $69B 2Y note auction (91282CNP2) stopped through: 3.920% high yield vs. 3.925% WI; 2.62x bid-to-cover vs. 2.58x prior.
• Peripheral stats: Indirect take-up retreated to 55.33% from 60.5% prior, directs climbed to 34.37% vs. 26.33% prior, primary dealer take-up 10.30% vs. 13.17% prior.

• Headlines surrounding the uncertain future for Fed Governor Lisa Cook inspired some sharp two-way flows for the dollar early Tuesday, with the initial dip finding solid demand. Second-tier US data in the form of durable goods and consumer confidence beat expectations, however, a weaker labour differential and the stable session for equities has allowed the greenback to consolidate at moderately weaker levels on the session.
• USDJPY’s intra-day range has been contained within 147.00-148.00, comfortably within the short-term parameters established following Powell’s Jackson Hole remarks. Clearance of the bear trigger at 146.21 (Aug 14 low) would reinstate a downtrend, however, a resumption of gains would instead open 149.12, 61.8% of the Aug 1 - 14 bear leg.
• Despite a 0.3% bounce today, EURUSD remains lower on the week as political uncertainty has ratcheted up following French Prime Minister Francois Bayrou’s plan to call a confidence vote. The trend set-up in EURUSD remains bullish and short-term weakness is for now considered corrective. Support at the 50-day EMA remains intact, at 1.1597. A clear break of it would signal scope for a deeper retracement and potentially expose key support at 1.1392, the Aug 1 low.
• Ahead of the UK Budget (likely late October/early November), vols are recovering off seasonal lows: EUR/GBP 3m implied vols have recovered the entirety of the early August dip - with EUR, USD vols also improving.
• The 30-min candle chart shows EUR/GBP testing the nascent uptrend drawn off the late May lows of 0.8356. The level, today at 0.8624-0.8627, has been tested, and a break below could mark a resumption of the fade off 0.8769, opening 0.8508 in the short-term.
• Australia July CPI headlines a quiet schedule on Wednesday, before the market turns its attention to US GDP & PCE later in the week, as well as Eurozone inflation prints.