AUDNZD: Westpac Maintain Long Bias

The other Swedish data released this morning was less dovish than the very weak retail sales report. However, there’s not yet enough strength to call into question the recent dovish Riksbank guidance tilt: 

Household and corporate lending growth continued to accelerate in May, with the former rising to 2.4% Y/Y (vs 2.3% prior) and the latter climbing to 1.9% Y/Y (vs 1.5% prior), the highest since September 2023. Although near term growth prospects appear soft due to heightened uncertainty, an improving credit impulse should support activity in the coming years. The Riksbank projects calendar adjusted GDP growth at 1.4% in 2025, 2.2% in 2026 and 2.1% in 2027.

April Wages: Non-manual workers wages reported by BBG fell notably to 2.5% Y/Y (vs 3.3% prior), but the more closely followed series from the National Mediation Office saw whole economy wages tick up to 3.5% Y/Y (vs 3.4% prior). Private sector pay rose two tenths to 3.5% Y/Y. The Riksbank has noted that the recent union wage agreement should support real incomes, but not threaten the inflation target.

• Risk On seems to favour continued BTP/Bund spread tightening, looking at the chart it is testing through the 87.5bps, which is the 2015 low.
• Next would see the 2009 low at 65.37bps.

(Chart source: Bloomberg Finance LP/MNI).

• RES 4: 171.09 High Jul 23 ‘24 
• RES 3: 170.47 76.4% Fibonacci retracement for Jul - Aug ‘24 downleg  
• RES 2: 169.91 1.236 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 169.81 High Jun 27
• PRICE: 168.98 @ 07:59 BST Jun 30 
• SUP 1: 167.92 Low Jun 24 
• SUP 2: 166.94 20-day EMA 
• SUP 3: 165.91 Low Jun 16   
• SUP 4: 164.95 50-day EMA   

The trend set-up in EURJPY is unchanged, it remains bullish. Recent gains have resulted in a break of 166.69, the Oct 31 ‘24 high. Scope is seen for a climb towards 170.47, a key Fibonacci retracement point. Note that the uptrend is in overbought territory, a pullback would unwind this condition. Support to watch lies at 166.94, the 20-day EMA. Clearance of this EMA  would suggest potential for a deeper retracement.