FOREX: AUD and NZD Consolidate Significant Losses, EURUSD Extends Pullback
Mar-20 18:09
- The dollar index spent Thursday’s session steadily reversing the FOMC-inspired move, culminating in the DXY looking to end the day up 0.46%. The greenback was supported by a similar reversal lower for equities, as weakness for European benchmarks dragged the major US indices down, albeit by a more moderate amount.
- The waning risk sentiment left the likes of AUD and NZD at the bottom of the G10 leaderboard. For AUDUSD (-0.96%), we had noted that 0.6400 continued to provide important pivot resistance, and today’s resumption of weakness highlights the medium-term bearish technical outlook.
- Price action has been supported by the weaker-than-expected Australian jobs data overnight, and AUDUSD has significantly narrowed the gap to initial support, which is at 0.6259, the Mar 11 low. Below here, a move below key short-term support at 0.6187, the Mar 4 low, is required to resume the downtrend.
- Crude markets have firmed after the US sanctioned a Chinese “teapot” refinery for the first time, alongside further tankers carrying Iranian crude. Price dynamics prompted a solid reversal higher for the Canadian dollar, leaving USDCAD around unchanged levels.
- The Euro has also weakened, prompting EURUSD to extend its reversal from cycle highs to 140 pips, registering a low of 1.0815. Support for the pair remains much further out, at 1.0599, the 50-day EMA and a short-term pivot level.
- Both SEK and CHF remain weaker on the session, with the Riksbank averting any hawkish risks and the Swiss National Bank siding with the consensus and delivering a 25bp rate cut to 0.25%.
- The Bank of England decision had some very marginal hawkish additions (Mann voting for unchanged), however, the small pop higher for GBPUSD was swiftly pared. Cable has been unable to maintain a rally above 1.30 in recent sessions, prompting the pair to drift back towards 1.2950 ahead of the APAC crossover.
- Japan national CPI crosses early Friday, before Canadian retail sales headlines the North American calendar.
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FED: US TSY 52W BILL AUCTION: HIGH 4.050%(ALLOT 6.53%)
Feb-18 18:02
- US TSY 52W BILL AUCTION: HIGH 4.050%(ALLOT 6.53%)
- US TSY 52W BILL AUCTION: DEALERS TAKE 31.76% OF COMPETITIVES
- US TSY 52W BILL AUCTION: DIRECTS TAKE 1.68% OF COMPETITIVES
- US TSY 52W BILL AUCTION: INDIRECTS TAKE 66.56% OF COMPETITIVES
- US TSY 52W AUCTION: BID/CVR 3.03
EURUSD TECHS: Bull Theme Remains In Play
Feb-18 18:00
- RES 4: 1.0630 High Dec 6
- RES 3: 1.0594 Dec 9 ‘24
- RES 2: 1.0533 High Jan 27 and a reversal trigger
- RES 1: 1.0514 High Feb 14
- PRICE: 1.0467 @ 16:07 GMT Feb 18
- SUP 1: 1.0402 20-day EMA
- SUP 2: 1.0280/0141 Low Feb 10 / 3 and the bear trigger
- SUP 3: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 4: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing
A bull cycle in EURUSD remains intact and the pair is trading closer to its recent highs. Last week’s gains have reinforced current conditions and strengthened a short-term reversal signal on Feb 3 - a hammer. This suggests scope for an extension near-term. The pair has breached the 50-day EMA, at 1.0432, and sights are on 1.0533, the Jan 27 high. Initial firm support lies at 1.0280, the Feb 10 low.
BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform Ahead Of UK Inflation Data
Feb-18 17:59
Gilts underperformed Bunds Tuesday, fully unwinding Monday's outperformance.
- UK labour market data early in the session set the tone: the implications of stronger-than-expected signals from the quantity side were weighed against broadly in-line pay growth.
- Gov Bailey said later that the labour market data did not fundamentally change the outlook.
- ECB's Cipollone said at an MNI event that he believes the move away from scarce collateral conditions is not yet having a major impact on Eurozone money markets.
- The UK curve bear flattened on the day, while the German curve leaned steeper though was mixed throughout.
- Periphery/semi-core EGB spreads tightened moderately, with European equities gaining.
- Wednesday's schedule is highlighted by UK inflation data - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.8bps at 2.132%, 5-Yr is unchanged at 2.267%, 10-Yr is up 0.4bps at 2.493%, and 30-Yr is down 0.1bps at 2.745%.
- UK: The 2-Yr yield is up 3.9bps at 4.243%, 5-Yr is up 3.3bps at 4.253%, 10-Yr is up 3.1bps at 4.558%, and 30-Yr is up 2.8bps at 5.146%.
- Italian BTP spread down 0.4bps at 105.4bps / French OAT down 1.6bps at 71.2bps
