FOREX: USD Index Extends Consolidation Phase; Waller Speech in Sight
Aug-28 09:17
- The USD Index continues to hug the 50-dma, extending a broadly consolidative phase that has dominated across the second-half of August. Month-end flows may dominate for the rest of the week, and while most models indicate a neutral finish to the month for August, there remains risk of erratic flow and price action, particularly around the WMR Fix.
- French politics remains a key focus for markets, with French bond markets still sensitive to ongoing negotiations around Bayrou's plans for tax-and-spend and the goal of reducing the deficit in the coming years. A failed confidence vote looks more than likely on September 8th - which may lead to fresh legislative elections as soon as October.
- EUR/AUD remains a compelling chart - the rate has edged lower again Thursday, extending the pullback phase off mid-August's 1.8158. The price's approach to key potential inflection points is worth monitoring - Fibonacci retracement levels spanning the post-COVID range of 1.4285 - 1.9802 have remained highly relevant touchpoints for short-term inflection and reversal points in the cross. This year alone, 1.6392 (Feb'25), 1.7043 (Mar'25), 1.8500 (Apr'25) and 1.7694 (Jul'25) have come into play as key pivot points, marking the 38.2%, 50.0%, 76.4% and 61.8% retracements respectively.
- After a quiet Wednesday schedule, data releases pick up Thursday, with the secondary reading of US Q2 GDP and weekly jobless claims data due. Pending home sales numbers for July are then set to follow.
- An after-market hours speech from Fed's Waller will likely garner focus given his status as one of the favourites to replace Jerome Powell as Fed President next year - he is set to be addressing an event in Miami on the topic of monetary policy, inflation and the Fed's outlook this year, with a full text release.
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ITALY T-BILL AUCTION RESULTS: 6-Month BOT
Jul-29 09:11
| Type | 6-month BOT |
| Maturity | Jan 30, 2026 |
| Amount | E6.5bln |
| Target | E6.5bln |
| Previous | E1.5bln |
| Avg yield | 1.993% |
| Previous | 1.950% |
| Bid-to-cover | 1.48x |
| Previous | 1.64x |
GILT AUCTION RESULTS: Another strong 3-year gilt auction
Jul-29 09:07
- Another strong 3-year gilt auction for the 4.375% Mar-28 gilt.
- The tail of 0.2bp was a little wider than the previous auction's 0.1bp but still very tight while the lowest accepted price (LAP) of 101.057 is higher than any other time of the day (excluding the first 10 minutes of trading).
- The price of the 4.375% Mar-28 gilt is still trading below that of the LAP at the time of writing but is moving higher. Gilt futures have shown little movement despite the strong result.
GILT AUCTION RESULTS: 4.375% Mar-28 Gilt
Jul-29 09:03
| 4.375% Mar-28 Gilt | Previous | |
| Amount | GBP5.00bln | GBP5.00bln |
| Avg yield | 3.941% | 3.847% |
| Bid-to-cover | 3.71x | 3.46x |
| Tail | 0.2bp | 0.1bp |
| Avg price | 101.062 | 101.327 |
| Low price | 101.057 | 101.324 |
| Pre-auction mid | 101.039 | 101.311 |
| Previous date | 02-Jul-25 |
