BTP TECHS: (Z5) In A Corrective Cycle
- RES 4: 123.14 1.764 proj of the Sep 3 - 11 - 25 price swing
- RES 3: 122.81 1.618 proj of the Sep 3 - 11 - 25 price swing
- RES 2: 122.53 1.500 proj of the Sep 3 - 11 - 25 price swing
- RES 1: 121.94 High Oct 17 / 22 and the bull trigger
- PRICE: 121.17 @ Close Nov 6
- SUP 1: 120.74 High Aug 5 and a recent breakout level
- SUP 2: 120.60 50-day EMA
- SUP 3: 120.13 Low Oct 10
- SUP 4: 119.48 Low Oct 7
The trend conditions in BTP futures remains bullish and recent weakness - for now - appears corrective. Note the moving average studies are in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 121.94, the Oct 17 / 24 high. Initial firm support to watch is 120.74, the Aug 5 high. The contract is overbought, a deeper retracement would allow this condition to unwind.
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GERMAN DATA: August Manufacturing Sees Broad-Based Drop to Cycle Lows
- Industrial production in August was much weaker than expectations (-4.3% M/M vs -0.9% cons). Destatis mentions some one-offs for the particularly weak print but the drop to cycle lows remains. On a 3m/3m comparison, IP printed -1.3%.
- "In August 2025, production in industry excluding energy and construction was down 5.6% from July 2025 after seasonal and calendar adjustment. Within industry, decreases were reported in all three major groups". See chart below for an index comparison.
- "The negative development of production was particularly attributable to the sharp decrease seen in the automotive industry, Germany's largest industrial branch (-18.5% on the previous month). The marked decrease may be explained, at least in part, by the combination of annual plant closures for holidays and production changeovers. The development of production in the manufacture of machinery and equipment (-6.2%) continued to have a negative impact on the overall result, following the increase of 9.2% registered in July 2025 [eg base effects at play here]. The drop in output witnessed in the pharmaceutical industry (-10.3%) and in the manufacture of computer, electronic and optical products (-6.1%) also had a negative effect.", Destatis comments on drivers.
US TSY FUTURES: FV/US Flattener Blocked
Latest block trades lodged at 07:53:06 London/02:53:06 NY:
- FVZ5 6.1K lots blocked at 109-10.25, looks like a seller.
- USZ5 1.9K lots blocked at 116-29, looks like a buyer.
- Looks like a ~$270K DV01 FV/US flattener, cash 5s20s incrementally flatter (~0.5bp) since the block was lodged, last 97.8bp, operating comfortably within the 92.1-118.5bp closing range seen since late July.
AUDUSD TECHS: Monitoring Support
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17 and key resistance
- RES 1: 0.6629 High Sep 30 & Oct 01
- PRICE: 0.6564 @ 08.06 BST Oct 8
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and the latest pullback is considered corrective. The pair has again pierced support at the 50-day EMA, at 0.6563. A clear break of this average would signal scope for a deeper retracement and expose 0.6527 once again, a Fibonacci retracement. For bulls, a reversal higher would refocus attention on 0.6707, the Sep 17 high. Initial resistance to watch is 0.6629, the Sep 30 and Oct 1 high.
