GILTS: Yields Edge Higher

• RES 4: 1.4292 61.8% Retracement Feb’25 - Jan’26 downleg
• RES 3: 1.4264 1.618 proj of the Mar 9 - 31 - May 1 price swing
• RES 2: 1.4248 High Jun 24, 25 and 30 and the bull trigger  
• RES 1: 1.4190 High Jul 9  
• PRICE: 1.4092 @ 08:24 BST Jul 29
• SUP 1: 1.4032/4003 50-day EMA / Low Jul 20
• SUP 2: 1.3981 38.2% retracement of the May 1 - Jun 24 bull cycle  
• SUP 3: 1.3951 Low Jun 15
• SUP 4: 1.3899 50.0% retracement of the May 1 - Jun 24 bull cycle 

The USDCAD trend structure remains bullish and the bear cycle since Jun 24 is considered corrective. Attention is on the next important support at 1.4035, the 50-day EMA. The average has been pierced, however, it remains intact and the latest recovery is encouraging for bulls. A clear break of the EMA would signal scope for a deeper corrective retracement. The bull trigger is at 1.4248, the Jun 24, 25 and 30 high.

• RES 4: 0.7120 61.8% retracement of the May 6 - Jun 30 bear leg 
• RES 3: 0.7088 High Jun 15  
• RES 2: 0.7071 50.0% retracement of the May 6 - Jun 30 bear leg 
• RES 1: 0.7027 High Jul 21  
• PRICE: 0.6952 @ 08:20 BST Jul 29
• SUP 1: 0.6938 Intraday low 
• SUP 2: 0.6907 Low Jul 8
• SUP 3: 0.6865 Low Jun 30 and the bear trigger 
• SUP 4: 0.6757 38.2% retracement of the Apr 9 ‘25 - May 6 bull cyle

AUDUSD is in consolidation mode. A bear cycle remains intact and - for now - the recent climb is considered corrective. The pair has pierced the 50-day EMA, at 0.7005. A clear break of it would highlight a stronger short-term bounce and signal scope for a continued retracement of the May 6 - Jun 30 bear leg. Key support and the bear trigger is 0.6865, the Jun 30 low. A breach would resume the downtrend.

• SONIA futures are marginally lower versus yesterday’s settlement levels despite the modest bounce in oil/gas benchmarks, exhibiting a similar reaction to Euribor counterparts.
• BOE-dated OIS still fully price a 25bp hike through November, with ~57bps of hikes priced through the Middle of next year.
• June money and credit data is due this morning, though the BOE decision on Thursday remains the main domestic focus. There will be a number of key factors to watch : First will be the vote split – although we note that a 7-2 or 6-3 vote with Mann as an additional dissenters (even if she votes for a 50bp hike) would not cause big moves. More pertinent is likely to be the individual member paragraphs of the swing voters. We also expect to have boxes in the MPR updating neutral rate expectations and giving guidance on the impact that QT has had on gilt yields and market functioning. Of course, the guidance will be important, too, but we think that the most likely outcome is that most elements of the guidance remain unchanged.
• Full BOE preview here