EURGBP TECHS: Key Support Remains Exposed
- RES 4: 0.8925 High Mar 7 and a key resistance
- RES 3: 0.8905 Trendline drawn from the Feb 3 high
- RES 2: 0.8890 High Mar 10
- RES 1: 0.8844 High Mar 15
- PRICE: 0.8760 @ 06:20 GMT Mar 17
- SUP 1: 0.8719 Low Mar 15 and key support
- SUP 2: 0.8712 61.8% retracement of the Dec 1 - Feb 3 bull leg
- SUP 3: 0.8691 Low Dec 19
- SUP 4: 0.8649 76.4% retracement of the Dec 1 - Feb 3 bull leg
EURGBP appears vulnerable near-term and the cross is trading closer to its recent lows. The cross has breached support at 0.8755, the Feb 28 low and pierced 0.8722, the Jan 19 low. Clearance of 0.8722 would leave the 0.8700 handle exposed. Initial firm resistance is seen at Wednesday’s high of 0.8844. A breach of this resistance is required to ease bearish pressure and allow for a move towards 0.8905, a trendline resistance.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times GMT)
| Date | Time | Country | Event |
| 15-Feb | 0800 | ES | HICP (f) |
| 15-Feb | 1000 | EU | Industrial Production / Trade Balance |
| 15-Feb | 1400 | EU | ECB Lagarde at Plenary Debate on ECB Annual Report |
| 16-Feb | 0915 | EU | ECB Panetta Discussion at Centre for European Reform |
| 16-Feb | 1500 | EU | ECB Lane Dow Lecture at NIES London |
| 16-Feb | 1945 | EU | ECB de Guindos Students Discussion |
| 17-Feb | 0700 | DE | PPI |
| 17-Feb | 0745 | FR | HICP (f) |
| 17-Feb | 0900 | EU | EZ Current Account |
| 20-Feb | 0700 | DE | PPI |
| 20-Feb | 1000 | EU | Construction Production |
| 20-Feb | 1500 | EU | Consumer Confidence Indicator (p) |
| 21-Feb | 0745 | FR | Retail Sales |
| 21-Feb | 0815 | FR | S&P Global Services/Manufacturing PMI (p) |
| 21-Feb | 0830 | DE | S&P Global Services PMI (p) |
| 21-Feb | 0900 | EU | S&P Global Services PMI (p) |
| 21-Feb | 1000 | DE | ZEW Current Conditions / Expectations Index |
US TSYS: Marginally Richer In Asia
TYH3 deals at 112-14, +0-03+, a touch off the top of its 0-05 range on volume of ~70k.
- Cash Tsys sit flat to 1bp richer across the major benchmarks.
- Tsys opened Wednesday cheaper as Asia-Pac participants focused on yesterday's CPI numbers and hawkish Fedspeak from Dallas Fed President Logan in early regional trade.
- A recovery off session lows was facilitated by a move in ACGBs as Governor Lowe didn't deliver any fresh hawkish messaging at a Senate appearance.
- The modest richening move then held through the session, with a couple of block buys in TU futures helping underpin the move, alongside weakness in e-minis and the major regional equity indices.
- Little meaningful macro headline flow was observed.
- In Europe today we have CPI/RPI from the UK, further out there is Empire Manufacturing and Retail Sales. We also have the latest 20-Year Tsy Supply.
AUSSIE BONDS: Mid-Session Reversal Sees ACGBs Outperform U.S. Tsys
YM and XM reverse almost all of the early weakness to close -1.0 and flat, respectively, after RBA Governor Lowe's Senate Economics Committee Hearing failed to deliver a message that was meaningfully more hawkish than the one contained in last week’s RBA communique. YM and XM were down as much as -10.0 in early trade. Cash ACGBs saw yields pullback from the morning highs to be flat to up 1bp out to the 10-year zone and flat to -2bp for the 15-30yr benchmarks.
- Swaps rates closed flat to up 2bp after scaling back most of the morning’s weakness to leave the 3s10s curve 2bp flatter.
- The AU-US 10-year yield differential closed at ~+2bp off the morning wides of +6bp.
- Bills were 3-4bp up from session lows, closing +1 to -6 through the reds.
- While March meeting RBA-dated OIS pricing has shown little movement over recent days, attaching a 92% chance of a 25bp hike, terminal rate expectations have moved in a 4.10%-4.22% range with current pricing for Sep/Oct-23 at just over 4.15%.
- In the run-up to tomorrow’s all important January Australian labour market data, the market is likely to find its guidance from abroad with January prints for UK CPI and U.S. retail sales the most noteworthy global data releases.
