PLN: Zloty Holds Onto Gains After EUR/PLN Breaches Another Round Figure
Bears managed to force a breach of 4.20 as EUR/PLN sank to fresh multi-year lows yesterday, as renewed greenback sales coincided with the NBP presser reaffirming the central bank's hawkish stance. The pair clings onto those gains this morning, last trading flat at 4.1894. Our technical analyst flags 4.1822, the 2.764 projection of the Nov 6 - 7 - 12 ‘24 price swing, as the next layer of support of note. On the flip side, a return above the 4.20 figure would give bulls some initial reprieve, before they set their sights on the 50-EMA/next round figure at 4.2490/4.2500.
- Governor Glapinski reiterated that inflation is expected to stay above the target for the remainder of this year and rebound in Q4 despite a temporary moderation in Q3. As a result, in his view, there are no grounds for lowering interest rates. Despite the confirmation of his hawkish bias, our sense was that the presser was marginally less hawkish than last month. The Governor admitted that the next move in rates will likely be down and listed some downside risks to the inflation outlook.
- Right after the press conference, ING economists wrote on X that the Governor slightly moderated the tone of his rhetoric, although they could not identify the reason for it. In the subsequent discussion, they said that concerns about being outvoted may have played a role. In their opinion, "the experience with the start of the cycle," which involved 100bp worth of easing over two months in autumn 2023, "suggests that the inauguration of the second phase of cuts can also be spectacular" as opposed to limited to a 25bp move.
- POLGB yields have ticked higher across the curve. The WIG20 Index has added 0.6% today.
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US TSY FUTURES: US Yields tick higher, Dollar finds a Bid
- US Treasuries are seeing a pick up in volumes to the sell side, getting dragged lower by Europe.
- The Dollar is finding a broader bid on the follow, with US Yield elevatged overall, EUR, GBP fell to their respective lows against the Greenback.
- Main focus target in the 10yr Yield is at 4.7351%, the 2024 high, while in G10 FX, the Dollar has pared some of its overnight losse to edge in the green against most G10.
GILTS: Light Bull Steepening, Supply & Global FI Cues Eyed
Gilt futures off opening highs, with core global FI markets seeing some light selling pressure in recent trade.
- Contract last +10 at 91.50.
- Bearish technicals intact, initial support at yesterday’s low (91.31), while initial resistance comes in at yesterday’s high (92.13)
- Yields 1-2bp lower across the curve, light bull steepening.
- 10s last 4.67%, focus on 4.70% next, yesterday’s high was 4.687%.
- 30s topped out at 5.25% yesterday, which represents the highest level seen since ’98.
- 10-Year gilt/Bunds ~2bp tighter on the day, last ~216bp.
- There isn’t anything of note on the UK data calendar today, which will leave focus on swelling global supply and U.S. data.
- On the supply front, the DMO will return to market today, looking to sell GBP4.25bln of the 4.375% Mar-30 gilt.
- This morning has already seen the DMO confirm a syndicated re-opening of the 4.375% 2040 gilt, planned for w/c January 20 "subject to demand and market conditions".
USDCAD TECHS: MA Studies Remain In A Bear-Mode Set-Up
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.489 - 50-day EMA
- PRICE: $30.054 @ 08:08 GMT Jan 8
- SUP 1: $28.748 - Low Dec 19
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play - for now - and recent gains appear corrective. The metal has recently breached support at $29.642, the Nov 28 low. The break lower opens $28.446, a Fibonacci retracement. Note that moving average studies are in a bear-mode position highlighting a dominant downtrend. Key resistance has been defined at $32.338, the Dec 12 high. A break of this level would signal a reversal.
