CREDIT PRE-MARKET: EUR Market Wrap
- Bunds closed 3-5bp tighter with early support from lower-than-expected flash inflation data from France and Spain that was steadily pared before US data took yields lower again on a modest dovish reaction to US PCE data that confirmed trend rates very similar to what Fed Governor Waller had indicated last week. WoW moves of -15bp/-7bp.
- Main/XO ended +0.3bp/+1bp at 57.5bp/307bp for WoW moves of -0.7bp/-5bp while €IG was flat (Corps +0.2bp, Fins -0.1bp, €HY +2bp) for a WoW move of +1.7bp (Corps +1.5bp, Fins +2bp, €HY -8bp). All sectors were wider on the week with Energy and Cycs close to +3bp. $IG was -0.4bp (Corps -0.2bp, Fins -0.7bp, $HY -1bp) for a WoW move of -1.5bp (Corps -1.1bp, Fins -2.3bp, $HY -2bp).
- SXXP ended +0.5% while SPX was -0.1% for WoW moves of +2.7%/+0.6%. WoW €IG movers included Forvia +23%, LVMH, +19%, Kering +18%, Prosus +18%, Compagnie Financiere Richemont +18%, AIA Group +17%, Global Payments -9%, Commonwealth Bank of Aus -7%, National Australia Bank -7%, Novo Nordisk -6%.
- SX5E/SPX futures are flat. The main macro focus today has been around the weekend news of loosening property restrictions in 3 large China cities. In the equity space, we saw very large gains for China/HK markets particularly in property related areas. China September PMIs were mostly weaker than forecast but this was largely ignored by the market.
- Looking ahead, we have the second UK GDP estimate, along with regional EU inflation details (with German figures out). In the US session, we have the MNI Chicago PMI print, as well as hearing from Fed Chair Powell.
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USDCAD TECHS: Trend Direction Remains Down
- RES 4: 1.3739 High Aug 15
- RES 3: 1.3670 50-day EMA
- RES 2: 1.3616 20-day EMA
- RES 1: 1.3519 High August 26
- PRICE: 1.3498 @ 16:52 BST Aug 30
- SUP 1: 1.3441 Low Aug 28
- SUP 2: 1.3420 Low Mar 8
- SUP 3: 1.3358 76.4% retracement of the Dec 27 - Aug 5 bull leg
- SUP 4: 1.3288 Low Jan 5
USDCAD bears remain in the driver’s seat and the pair is trading at its recent lows. The latest impulsive sell-off reinforces the current bearish condition and moving average studies are unchanged and remain in a bear-mode set-up. Furthermore, 1.3589, the Jul 11 low, has recently been cleared, strengthening a bearish theme. Sights are on 1.3358, a Fibonacci projection. On the upside, initial firm resistance to watch is at 1.3616,the 20-day EMA.
AUDUSD TECHS: Bullish Theme
- RES 4: 0.6900 High Jun 16 ‘23
- RES 3: 0.6871 High Dec 28 and a key resistance
- RES 2: 0.6839 High Jan 2
- RES 1: 0.6824 High Aug 29
- PRICE: 0.6760 @ 16:49 BST Aug 30
- SUP 1: 0.6700/6661 20- and 50-day EMA values
- SUP 2: 0.6571 Low Aug 15
- SUP 3: 0.6508/6350 Low Aug 8/ 5 and the bear trigger
- SUP 4: 0.6339 Low Nov 10’23
A bull cycle in AUDUSD remains intact despite the weakness into the Friday close. The pair is holding on to its latest gains and the most recent move higher has resulted in a print above 0.6799, the Jul 11 / Aug 23 high and a bull trigger. A clear break of this hurdle would strengthen a bullish theme and pave the way for an extension towards 0.6871, the Dec 28 ‘23 high and the next key resistance. Initial firm support to watch lies at 0.6700, the 20-day EMA.
EURJPY TECHS: Copy - Trend Condition Remains Bearish
- RES 4: 167.53 Low Jun 14
- RES 3: 164.82 50-day EMA
- RES 2: 164.06 200 DMA
- RES 1: 163.89 High Aug 15
- PRICE: 161.32 @ 16:48 BST Aug 30
- SUP 1: 159.79 Low Aug 12
- SUP 2: 157.30/154.42 Low Aug 6 / 5 and the bear trigger
- SUP 3: 153.87 Low Dec 14 ‘23
- SUP 4: 153.23 Low Dec 7 ‘23 and a key support
The trend outlook in EURJPY is bearish and this is reinforced by moving average studies that remain in a bull-mode set-up. The recovery that started Aug 5 has allowed an oversold condition to unwind. The cross has pierced resistance the 20-day EMA. A clear break of it would expose resistance at the 50-day EMA, at 164.82. For bears, a stronger reversal lower would signal the end of the correction and open 154.42, the Aug 5 low.
