What to watch
- Markets are continuing to adjust to yesterday's FOMC Minutes where the pace of proposed balance sheet runoff was probably a bit higher than expected. And when combined with the language surrounding "one or more 50bp increases," led to more concerns over the growth outlook than rates. This explains the reaction we have seen in Treasuries, which have moved above yesterday's range in overnight trading while the Eurodollar strip is also higher as markets price in a bit more work being done by the balance sheet than rate hikes over the cycle.
- Looking ahead we will receive the ECB Accounts of their monpol meeting this afternoon, and given the surprisingly more hawkish tilt at the March meeting, these will be closely watched too. Any hints on how soon next steps could come and whether there is any scope to bring forward any expected policy moves are likely to be analysed.
- We will also hear from Fed's Bullard, Bostic and Evans as well as BOE's Pill (although the latter is just giving opening remarks at a conference for 15 minutes - so may not address much if anything on monpol).
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EUROZONE T-BILL ISSUANCE: Bill Supply for W/C Mar 7, 2022 (1/2) - Monday Recap
This week is a busy week for bill issuance across the Eurozone. Germany, the Netherlands and France have issued bills for E14.4bln so far and Spain, Belgium, Finland, the ESM, Greece and Italy are still scheduled to sell bills for an estimated further E14.9bln. We look for issuance from first-round operations of E29.2bln, up from E25.4bln last week.
- Yesterday, Germany came to the market, selling E6.0bln of bubills: E3.0bln (E2.932bln allotted) of the 3-month Jun 22, 2022 bubill and a further E3.0bln (E2.145bln allotted) the 9-month Dec 14, 2022 bubill.
- Also yesterday, the Netherlands sold E2.68bln of DTCs (versus a E2.0-4.0bln target range): E450mln of the Apr 28, 2022 DTC, E1.0bln of the Jun 29, 2022 DTC, E230mln of the Aug 30, 2022 DTC and E1.0bln of the new Sep 29, 2022 DTC.
- On Monday afternoon, France sold E5.692bln (top of the target range) of 13/20/30/50-week BTFs: E3.097bln the new 13-week Jun 9, 2022 BTF, E997mln of the 20-week Jul 27, 2022 BTF, E399mln of the 30-week Oct 5, 2022 BTF and E1.199bln of the 50-week Feb 22, 2023 BTF.
AUDUSD TECHS: Bearish Shooting Star Candle
- RES 4: 0.7599 High Jul 6, 2021
- RES 3: 0.7556 High Oct 28, 2021 and a key resistance
- RES 2: 0.7532 High Nov 2, 2021
- RES 1: 0.7441 High Mar 7
- PRICE: 0.7281 @ 06:29 GMT Mar 8
- SUP 1: 0.7236 20-day EMA
- SUP 2: 0.7208 50-day EMA
- SUP 3: 0.7141 Low Feb 25
- SUP 4: 0.7095 Low Feb 24
AUDUSD initially strengthened Monday, before slipping into the close. Yesterday’s price pattern is a bearish shooting star candle, highlighting a short-term top. Short-term weakness is likely a correction though and opens support at 0.7236/08, the 20- and 50-day EMA values. The trend outlook is bullish following recent gains and the break of resistance at 0.7314, Jan 13 high. This has reinforced bullish conditions, exposing 0.7471, the Nov 4 high.
EURJPY TECHS: Southbound
- RES 4: 129.58 50-day EMA
- RES 3: 128.77 High Mar 2
- RES 2: 127.39 Low Dec 3/6
- RES 1: 125.90 High Mar 7
- PRICE: 125.41 @ 06:21 GMT Mar 8
- SUP 1: 124.28 50.0% of the 2020 - 2021 bulls cycle
- SUP 2: 123.45 1.618 proj of the Jan - Sep - Oct ‘21 price swing
- SUP 3: 123.01 Low Nov 20 2020
- SUP 4: 128.85 Low Nov 19 2020
EURJPY remains bearish. The downtrend accelerated Friday and the cross traded to a fresh cycle low once again on Monday. Last week’s move lower confirmed a resumption of the downtrend and highlights an acceleration of the current bear cycle. The focus is on 124.28 next, 50.0% of the 2020 - 2021 bulls cycle. On the upside, resistance is seen at 127.39, the Dec 3/6 low and a recent key breakout level.
