US TSYS: Yield Climb Amid Unwinds Ahead Wed's FOMC
- Front month Treasury futures are trading near session lows after the bell. maintaining a relatively narrow range in the second half. Treasuries had traded moderately firmer in early London trade, unwinding support amid various Central Bank efforts to stem regional bank panic.
- Risk improved briefly after liquidity operations via standing U.S. dollar liquidity swap line arrangements announced Sunday, while the SNB also announced UBS's $3.25B takeover of Credit Suisse.
- Concerns over credit risk remained after CS' AT1 bond rout with holders of $17B debt taking the loss in full. A distracting narrative ahead of this Wednesday's FOMC policy announcement, the collapse of Silicone Valley Bank and Signature Bank over a week ago continues to weigh on regional banks (FRC -40%).
- While the collapse in financial shares over the past week have loosened policy expectations from: how many 50bp rate hikes by year end, to how soon will the Fed cut rates (implied pricing targeting July this morning), short end rates are traded lower (2Y yield currently 3.9177% +.0803), yield curves bear flattened amid ongoing wide ranges: 2s10s tapped -53.105 low earlier, vs. -33.080 overnight.
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USDCAD TECHS: Building Base for Recovery
- RES 4: 1.3751 High Nov 4
- RES 3: 1.3705 Dec 16 and the bull trigger
- RES 2: 1.3665 High Jan 6
- RES 1: 1.3537 High Feb 17
- PRICE: 1.3500 @ 16:25 GMT Feb 17
- SUP 1: 1.3275/3262 Low Feb 14 / 2
- SUP 2: 1.3226 Low Nov 15 and bear trigger
- SUP 3: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
- SUP 4: 1.3131 0.764 proj of the Oct 13 - Nov 15 - Dec 16 price swing
USDCAD traded higher again Friday, hitting the week’s best levels at 1.3537. This defies the view that the recent bounce was corrective, as the pair builds a base for further gains. The bull trigger is still someway off at 1.3705, but a weekly close above the 1.3500 would prove constructive. A break of 1.3262, Feb 2 low, would strengthen bearish conditions and open 1.3226, the Nov 15 low and the bear trigger.
US TSY FUTURES: BLOCK, Late 10Y Sale
- -8,000 TYH3 112-00.5, sell through 112-01.5 post-time bid at 1527:48ET, 112-00.5 last (+4)
AUDUSD TECHS: Pullback Nears Support
- RES 4: 0.7245 2.00 proj of the Nov 21 - Dec 13 - Dec 20 price swing
- RES 3: 0.7202 High Jun 9
- RES 2: 0.7172 1.764 proj of the Nov 21 - Dec 13 - Dec 20 price swing
- RES 1: 0.7082/0.7158 High Feb 3 / 2 and the bull trigger
- PRICE: 0.6855 @ 16:24 GMT Feb 17
- SUP 1: 0.6812 Low Feb 16
- SUP 2: 0.6781 38.2% retracement of the Oct 13 - Feb 2 uptrend
- SUP 3: 0.6755 Trendline support drawn from the Oct 13 low
- SUP 4: 0.6688 Low Jan 3
AUDUSD printed a lower low early Friday, putting prices through first support at 0.6856 to expose 0.6781. The broader uptrend remains intact for now, and the recent move lower highlights a correction that is allowing a recent overbought trend condition to unwind. Key resistance and the bull trigger have been defined at 0.7158, the Feb 2 high. A break would resume the uptrend.
