EUROZONE ISSUANCE: EGB Supply
Austria, Germany and Italy are all due to issue this week. We pencil in gross nominal issuance of E14.8bln, down from E31.0bln last week.
- Austria will kick off issuance for the week this morning with an RAGB auction. On offer will be a combined E1.265bln of the 5-year 0% Oct-28 RAGB (ISIN: AT0000A2VB47) and the on-the-run 2.90% Feb-33 RAGB (ISIN: AT0000A324S8). This is likely to be the last Austrian auction of 2023 and follows the triple-tranche syndication of 19 October.
- Tomorrow, Germany will come to the market to sell E4bln of the 10-year 2.60% Aug-33 Bund (ISIN: DE000BU2Z015).
- Italy will look to conclude issuance for the week on Friday with a 3/7/15-50-year BTP auction. We expect reopenings of both the 3-year on-the-run 3.85% Sep-26 BTP (ISIN: IT0005556011) and the 7-year on-the-run 4.00% Nov-30 BTP (ISIN: IT0005561888). We have less conviction on the 15-50-year BTP on offer. The bonds on offer will be announced late this afternoon.
NET NOMINAL FLOWS: This week sees redemptions of E3.5bln from a formerly 7-year EU-bond and coupon payments for the week of E0.3bln. This leaves net flows for the week an estimated positive E11.0bln versus negative E15.5bln last week.
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JGB TECHS: (Z3) Trend Needle Continues To Point South
- RES 3: 148.74 - High Jul 24
- RES 2: 147.21 - High Aug 9
- RES 1: 146.41 - High Sep 4
- PRICE: 144.68 @ 15:29 BST Oct 06
- SUP 1: 144.15 - Low Jan 13 and a major support
- SUP 2: 143.95 - 2.00 proj of the Sep 8 - 12 - 15 price swing
- SUP 3: 143.29 - 2.618 proj of the Mar 22 - Apr 18 - May 12 swing
JGBs sold off sharply again last week, putting the contract further through support at 145.49, the Aug 17 low. A continuation lower and the clear break of this area confirms a resumption of the medium-term downtrend and paves the way for weakness towards 144.15, the Jan 13 low and a major support. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
AUSSIE 10-YEAR TECHS: (Z3) Medium-Term Trend Direction Cemented Lower
- RES 3: 96.160 - High Jul 20
- RES 2: 96.050 - High Sep 4 and a key resistance
- RES 1: 95.924 - High Sep 15
- PRICE: 95.395 @ 15:28 BST Oct 6
- SUP 1: 95.320 Lower 2.0% Bollinger Band
- SUP 2: 95.260 - Low Oct 04
- SUP 3: 94.565 - 1.0% 10-dma envelope
The Aussie 10yr futures broader trend direction is down, with the weakness cementing itself further through the Wednesday close. Key support and the bear trigger at 95.660, the Aug 17 low, has been breached. The break of this level reinforces a bearish theme and also confirms the breach of a major support at 95.670, the Jun 17 2022 low, marking a resumption of the medium-term downtrend. The focus is on 95.260, the October pullback low. Initial key resistance has been defined at 96.050, the Sep 4 high.
USDCAD TECHS: Northbound
- RES 4: 1.3862 High Mar 10 and a key resistance
- RES 3: 1.3857 2.0% 10-dma envelope
- RES 2: 1.3805 High Mar 24
- RES 1: 1.3786 High Oct 5
- PRICE: 1.3714 @ 15:59 BST Oct 6
- SUP 1: 1.3580 20-day EMA
- SUP 2: 1.3514 50-day EMA
- SUP 3: 1.3417 Low Sep 29
- SUP 4: 1.3381 Low Sep 19 and a key support
USDCAD traded higher this week and the pair remains bullish. Price breached key resistance at 1.3695, the Sep 7 high. This highlights a bullish theme and a reversal of the recent bearish phase. The break also confirms a resumption of the uptrend that started mid-July. Trendline resistance - at 1.3699 and drawn from the Oct 13 ‘22 high, has also been cleared and is a bullish development. Support is at 1.3580, the 20-day EMA.
