BUNDS: US-UK Trade deal and the BoE in focus Today
- Bund has faded from Yesterday's high, and still no set in stone explanation for the 93 ticks Rally in Bund, and the Euribor strip Yesterday, the bid clearly started post the French Auction and was led by the BTP and the OAT.
- Risk Off tone in the afternoon, also provided some upside extension.
- Fed Powell was clear that he wouldn't be rushed until there's more clarity on Trade policy, also warned of stagflation, higher inflation, and unemployment.
- The German IP beat had no impact on the contract, the Bund is off Yesterday's printed high of 131.72, but the resistance is still eyed at the 131.90 gap and the more important 132.03 level.
- Small support moves up to 131.24, followed by the 130.75/130.70 area, despite printing a 130.66 low this Week.
- There are no Tier 1 data out of Europe, US IJC is the only release, as US Wholesales will be Final reading.
- Focus will be on the BoE, which is expected to cut its Rates by 25bps.
- Trump said Yesterday that he will be announcing a trade deal with a major country Today (10.00ET), this will be the UK.
- SUPPLY: Spain 3s, 5s, 30s, Ireland 2034 (won't impact Bund), US sells $25bn of 30yr.
- SPEAKERS: BoE Bailey's presser.
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CHINA: Foreign Ministry Spokesperson Re-iterates Firm Opposition To US Tariffs
Latest headlines from Chinese Foreign Ministry spokeperson Lin Jian (via bbg):
- "*CHINA VOWS FIRM RESPONSE TO US TARIFFS, LIN SAYS" bbg
- "*CHINA DEPLORES, OPPOSES US TARIFF THREATS, LIN REPEATS"
Earlier this morning, a Chinese Ministry of Commerce Statement noted that "The US threat to escalate tariffs on China is a mistake on top of a mistake"..."If the US insists on its own way, China will fight to the end".
Other headlines from the ongoing NDRC symposium with local companies:
- "*CHINA'S NDRC VOWS TO DRIVE ECONOMIC RECOVERY, HELP FIRMS" bbg
- "*NDRC: CHINA TO ACCELERATE POLICY IMPLEMENTATION"
A reminder that today's PBOC fixing was above the closely watched 7.2000 for the time since 2023. The market is taking this as a sign of them being open to let the peg go, and continues to see a higher USD/CNH as the cleanest way to play the tariffs. Asia though could once again not get above the key 7.36/37 area.
EURJPY TECHS: Strong Bounce Reinforces A Bullish Theme
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 162.37/164.19 High Apr 7 / High Mar 18 and the bull trigger
- PRICE: 161.88 @ 07:18 GMT Apr 8
- SUP 1: 158.30 Low Apr 7
- SUP 2: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle
- SUP 3: 155.60 Low Low Mar 4
- SUP 4: 154.80 Low Low Feb 28
EURJPY is trading in a volatile manner. The latest pullback still appears corrective, and the strong rally off Monday’s low reinforces this theme. Key short-term support has been defined at 158.30, Monday’s low. A break of this level is required to signal scope for a deeper retracement. For bulls, the cross has traded through the 20-day EMA. A continuation higher would expose 164.19, the Mar 18 high and the bull trigger.
WTI TECHS: (K5) Bear Threat Remains Present
- RES 4: $74.66 - High Jan 22
- RES 3: $72.91 - High Feb 11
- RES 2: $68.72/72.28 - 50-day EMA / High Apr 2 and key resistance
- RES 1: $64.85 Low Mar 5 low and a recent breakout level.
- PRICE: $61.34 @ 07:00 BST Apr 8
- SUP 1: $58.95 - Low Apr 7
- SUP 2: $57.79 - 2.236 proj of the Jan 15 - Feb 4 - 11 price swing
- SUP 3: $56.81 - 2.382 proj of the Jan 15 - Feb 4 - 11 price swing
- SUP 4: $55.00 - Round number support
A bearish theme in WTI futures remains intact following the recent impulsive sell-off. The move down has resulted in the breach of a number of important support levels. The break reinforces a bearish threat and, despite being in oversold territory, signals scope for a continuation of the bear leg. Sights are on $57.79 next, a Fibonacci projection. Initial resistance is seen at $64.85, the Mar 5 low and a recent breakout level.
