PLN: USDPLN Continues to Probe Multi-Year Low, EURPLN Approaches Key Support
USDPLN continues to probe the 2020 low of 3.6168 as the USD Index consolidates at its lower levels. Meanwhile, EURPLN is trading lower for the fourth consecutive session with spot now just ~0.3% away from key short-term support at 4.2230, the May 15 low. Clearance of this level would strengthen a bearish theme and expose the 4.2000 handle. EuroStoxx futures have risen nearly 1% today while EURUSD remains close to its 4-year highs, underpinning the supportive macroeconomic backdrop for CEE currencies.
- Central bank hawkishness has been a key driver for CEE currencies this week following cautious commentary from both the NBH and the CNB earlier in the week. Next week, the NBP is expected to follow suit, keeping its main policy rate unchanged at 5.25%.
- Governor Adam Glapinski refused to offer any explicit forward guidance at the previous meeting, but his tone was evidently more cautious, with regulated household energy prices and loose fiscal policy flagged as key risks for the period ahead.
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BONDS: US and UK Roll pace (updated)
Roll pace Update, pretty much all done. All the Volume in US Treasuries is just spread related, and September is front Month.
- WNA: 86%%.
- USA: 87%.
- UXY: 81%.
- TYA: 82%.
- FVA: 82%.
- TUA: 81%.
- Gilt 95%.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Is Intact
- In the FI space, recent gains in Bund futures suggest the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. This week’s climb reinforces a bullish theme. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
- A bear cycle in Gilt futures remains in play and last week’s move lower reinforces the bearish theme. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.
EU-BOND AUCTION PREVIEW: On offer next week
The EU has announced it will be looking to sell the following at its auction next Monday, June 2:
- Up to E2.5bln of the 2.625% Jul-28 EU-bond (ISIN: EU000A4D5QM6)
- Up to E2.0bln of the 2.75% Feb-33 Green EU-bond (ISIN: EU000A3K4DW8)
- Up to E1.5bln of the 3.375% Nov-42 EU-bond (ISIN: EU000A3K4DV0)
