EURUSD TECHS: Watching Resistance

• RES 4: 1.1007 High May 10
• RES 3: 1.0905 High May 16
• RES 2: 1.0823 50-day EMA values
• RES 1: 1.0780 20-day EMA
• PRICE: 1.0690 @ 05:49 BST Jun 7
• SUP 1: 1.0667/35 Low Jun 6 / Low May 31 and the bear trigger
• SUP 2: 1.0608 Low Mar 17
• SUP 3: 1.0551 Low Mar 16
• SUP 4: 1.0516 Low Mar 15 and a key support

EURUSD is unchanged and trend conditions remain bearish. Fresh cycle lows last week reinforce the bearish theme and price continues to trade below the 20- and 50-day EMAs. The recent breach of 1.0653, 76.4% of the Mar 15 - Apr 26 rally, opens 1.0551, the Mar 16 low. A firm resistance is seen at 1.0780, the 20-day EMA. A break of this average would ease bearish pressure and signal scope for a stronger correction.

ACGBs are sitting cheaper (YM -6.0 & XM -1.5) as local participants consider RBA Governor Lowe's speech, a Q1 GDP miss and troubling productivity and unit labour costs (ULC) updates.

• Cash ACGBs are 2-5bp cheaper with the AU-US 10-year yield differential 4bp higher at +16bp.
• Swap rates are 1-5bp higher on the day.
• The bills strip is lower with pricing -2 to -10, late whites leading.
• RBA dated OIS pricing is 1-5bp firmer across meetings after the data with December leading.
• While Q1 GDP undershot expectations, it also revealed a 4.5% y/y fall in productivity, the lowest annual rate since the series began in 1979. Moreover, ULCs rose from 6.9% y/y in Q4 to 7.9%, the highest annual rate since 1990 outside the pandemic. This data is only going to increase inflation risks and the RBA’s concerns.
• Goldman Sachs has raised its terminal rate hike expectation for the RBA (to 4.85% from 4.35%) after RBA Lowe's speech earlier today. The bank now expects hikes in July, August and September. Previously it had expected a 25bp hike in July.
• The global economic calendar is light today, with the highlight being the BoC Policy Decision. The market has assigned a 46% probability of a 25bp rate hike.

TYU3 deals at 114-01, +0-08, a 0-04 range has been observed on volume of ~56k.

• Cash tsys sit 1bp cheaper to 1bp richer across the major benchmarks, the curve has twist flattened pivoting on 10s.
• Tsys were marginally pressured as spillover from ACGBs, in lieu of RBA Gov Lowe's remarks this morning as he noted further tightening may be needed due to wage gains and persistent service price pressures.
• A bid in JGBs and the Yen, which saw pressure on Japanese equities, facilitated a recovery off session lows. The move didn't follow through and tsys respected narrow ranges for the remainder of the Asian session.
• FOMC dated OIS price ~6bps of hikes into next week's meeting, a terminal rate of ~5.25% is seen in July with ~30bps of cuts priced for 2023.
• German Industrial Production and ECB-speak from de Guindos headlines the European session. Further out we have US Trade Balance and the latest monetary policy decision from the Bank of Canada.