JPY: USD/JPY Closes Thin London Session at Best Levels of the Day
- USD/JPY heads through the London close at the best levels of the session, however remains well short of the Friday high at 142.89 in a relatively thin session.
- Volumes are notably lower than average across both futures and options markets, keeping focus on risk events set for later in the week, namely US CPI and the prelim UMich set for Friday.
- The pullback off last week's high found support at the 141.32 50-dma, which has provided some early stability this week. This leaves 143.89 as primary resistance before any test on the cycle best at 145.07.
- Front-end vols are under pressure as markets discount any further BoJ policy shifts in the short-end, helping pressure 1m implied vols below 10 points - notably south of the 11.5 YTD average for the measure.
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JGB TECHS: (U3) Fades, But Still North of Support
- RES 3: 151.26 - High Mar 3 2022
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5 2022
- RES 1: 149.21/53 High May 12 / High Mar 22
- PRICE: 147.98 @ 15:46 BST Jul 07
- SUP 1: 147.34 - Low May 26
- SUP 2: 146.11 - Low Feb 22
- SUP 3: 144.15 - Low Jan 13
JGBs continue to operate above support at 147.34, the May 26 low. The contract has breached 148.41, the May 12 high. This strengthens a bullish case and signals scope for a climb towards the next key resistance at 149.21/53, highs from May and March. Clearance of these levels would highlight an important break. To the downside, a breach of 147.34 would signal a stronger reversal and open 146.11, the Feb 22 low.
AUSSIE 10-YEAR TECHS: (U3) Trend Needle Points South
- RES 3: 97.040 - High Aug 03 2022 (cont)
- RES 2: 96.780/975 - High May 5 / High MAr 14
- RES 1: 96.440 - High Jun 2
- PRICE: 95.760 @ 15:44 BST Jul 07
- SUP 1: 95.685 - Low Jul 7
- SUP 2: 95.670 - Low Jun 17 2022
- SUP 3: 95.094 - 1.0% 10-dma envelope
Bearish conditions in Aussie 10y futures firmed with further losses early Friday as prices hit a new pullback low. This wholly erases the recent bounce and reinforces current bearish conditions. Note that moving average studies remain in bear mode, highlighting the trend direction. The recent move lower opens the Dec 29 low of 95.670 for support. A break would accelerate losses. Initial firm resistance is at 96.440, the Jun 2 high.
USDCAD TECHS: Rally Hits Reverse as NFP Short of Forecast
- RES 4: 1.3449 61.8% retracement of the May 26 - Jun 27 downleg
- RES 3: 1.3427 High Jun 7
- RES 2: 1.3401 50-dma
- RES 1: 1.3386 50.0% retracement of the May 26 - Jun 27 downleg
- PRICE: 1.3297 @ 16:16 BST Jul 7
- SUP 1: 1.3280 20-day EMA
- SUP 2: 1.3203 Low Jul 4 and a key short-term support
- SUP 3: 1.3117 Low Jun 27 and the bear trigger
- SUP 4: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
The Thursday rally in USD/CAD hit reverse Friday, as a poorer-than-expected US jobs data dented the greenback. This reverses any bullish signal emanating from the break of resistance at the 20- and 50-day EMAs earlier in the week, with the pair more neutral into the end of the week. This confirms the view that the latest recovery had been corrective in nature, refocusing markets on Initial key short-term support at 1.3203, the Jul 4 low.
