MNI US MARKETS ANALYSIS - EUR/USD Circling Key Support

US TSYS SUMMARY: Attn On 7-Yr Supply, Fed's Clarida And Biden Presser

Treasuries have traded sideways with few catalysts overnight, within Wednesday's ranges and on unspectacular volumes (TY ~290k). Weekly jobs data, Fed speakers and 7-Yr supply ahead.

• Stocks have steadied after Wed's late risk-off; USD a little higher. Risk appetite picked up in Asia Pac overnight, leading Tsys to session lows, but that's moderated since with sideways trade.
• Jun 10-Yr futures (TY) down 1/32 at 132-02 (L: 131-30 / H: 132-05.5). 2-Yr yield is down 0.4bps at 0.1426%, 10-Yr is up 0.5bps at 1.6138%, and 30-Yr is up 0.5bps at 2.3141%.
• Another day with plenty of Fed speakers: Vice Chair Clarida at 1010ET probably the highlight. The rest, we've heard from already since the March FOMC meeting: NY Fed's Williams at 1030ET; Atlanta's Bostic at 1200ET; Chicago's Evans at 1300ET; and SF's Daly at 1900ET.
• Of note: Pres Biden holds his first formal press conference at 1315ET.
• In data, jobless claims and 3rd reading of Q4 GDP at 0830ET, with KC Fed Manufacturing at 1000ET.
• Supply concludes for the week with $80B in 4-/8-week bills at 1130ET, with $62B 7-Yr Note auction at 1300ET. Last NY Fed buy operation of the week too: ~$1.750B of 20-30Y Tsys (1030ET).

EGB/GILT SUMMARY: Risk On Theme Lingers

The risk-on theme prevails this morning with sovereign bonds trading firmer and equities posting fresh losses.

• The gilt curve has bull flattened with cash yields 1-3bp lower.
• Bunds opened on a strong footing and have made incremental gains through the morning. The curve is 1bp flatter on the day.
• OAT yields are 1-2bp lower with the curve similarly marginally flatter.
• BTP yields have slightly underperformed core EGBs. Last yields: 2-year -0.4152%, 5-year -0.0626%, 10-year 0.5826%, 30-year 1.5722%.
• Italy sold E4.00bn of the 0% Nov-22 BTP and EUR1.249bn of the 0.40% May-30 BTPei.
• The SNB left interest rates unchanged at today's monetary policy meeting while toning down the rhetoric on currency intervention.

EUROPE ISSUANCE SUMMARY: Italy Auction, UK Sukuk Syndication

Italy sells:
- E4.000bln 0% Nov-22 BTP Short Term, Avg yield -0.390%, Bid-to-cover 1.42x
- E1.249bln 0.40% May-30 BTPei, Avg yield -0.600%, Bid-to-cover 1.31x

• Deal Size set GBP500mln
• Spread Set: Flat to 1.50% Jul-26 gilt (IPT was +1bps)
• Maturity: 22 July 2026
• Book > GBP600mln

EUROPE OPTION FLOW SUMMARY

Eurozone:
RXJ1 172p, bought for 11.5 in 5k
RXK1 172/171/170p ladder, bought for 15 in 1.65k

DUK1 112.10/112.00/111.90p fly, bought for 1.5 in 2k

2RU1 100.37/100.50cs 1x2, bought the 1 for 2.75 in 2k
3RZ1 100/99.87ps vs 100.50/100.62cs, bought the ps for flat in 2k

UK:
2LZ1 99.50/62/75c ladder, bought for 0.25 in 3.5k
2LZ1 99.12/98.75ps + 3LZ1 98.87/98.50ps strip, bought for 15.25 in 4k

FOREX: EUR/USD Circling Key Support

• Currency markets are in flux early Thursday, with most major pairs trading within recent ranges amid a lack of major macro or news catalysts. EUR/USD is a slight stand-out, with the pair circling, but not quite breaking, the 1.18 handle. A break through here would be a considerable bearish signal, opening initially 1.1752, the 1.236 projection of the Jan 6 - Feb 5 - Feb - 25 price swing.
• Antipodean currencies modestly outperform, with AUD and NZD higher, reflecting a minor bounce after recent slides. AUD/USD continues to trade on either side of the $0.76 handle, with yesterday's lows at $0.7580 needing to give way before the recent downleg resumes.
• Focus turns to the data slate Thursday, with initial jobless claims and tertiary GDP data crossing from the US. Central bank speak also a highlight, with Fed's Clarida, Bostic, Evans and Daly all due as well as ECB's Schnabel & de Guindos and BoE's Bailey.
• Central bank decisions also cross from the South African and Mexican central banks.

FX OPTIONS: Expiries for Mar25 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1700-10(E1.2bln), $1.1800(E1.56bln), $1.1900(E610mln), $1.2000(E587mln)
• USD/JPY: Y108.00($615mln), Y108.80($560mln), Y109.25-30($1.5bln), Y109.40-50($688mln), Y110.00($691mln)
• EUR/GBP: Gbp0.8525(E525mln), Gbp0.8550(E800mln), Gbp0.8600(E1.1bln), Gbp0.8615(E589mln-EUR puts),Gbp0.8625-30(E816mln-EUR puts)
• AUD/USD: $0.7400(A$555mln)
• AUD/NZD: N$1.0745(A$576mln)
• USD/CAD: C$1.2505($700mln), C$1.2550($500mln)
• USD/MXN: Mxn20.83($480mln-USD puts)

Tech Focus: Price Signal Summary - USD Trend Outlook Remains Bullish

• In the equity space, S&P E-minis continue to consolidate but remain vulnerable following last week's selling pressure from 3978.50, Mar 18 high. The support to watch is 3875.00, Mar 19 low. A break would confirm a move through the 20-day EMA and reinforce short-term bearish conditions.
• In the FX space, EURUSD maintains a weaker tone following this week's breach of support at 1.1836, Mar 19 low. This opens 1.1800 next, the Nov 23 low and 1.1752, 1.236 projection of the Jan 6 - Feb 5 - Feb 25 price swing. The GBPUSD outlook remains bearish. The pair has this week cleared 1.3779, Mar 5 low and a bear trigger. Note this has also confirmed a breach of the 50-day EMA and a bull channel base drawn off the Nov 2 low. The focus is on 1.3641, 38.2% of the Sep 23 - Feb 24 bull cycle. USDJPY remains in an uptrend. Attention is on 109.56, 76.4% of the Mar 2020 - Jan downleg and an important pivot resistance. Watch support at 108.34 Mar 10 low.
• On the commodity front, a bullish theme in Gold remains in place following the recovery that started Mar 8. The focus is on $1777.6, the 50-day EMA. Support is at $1719.3, Mar 18 low. Oil contracts remain in bear mode despite yesterday's strong gains. Recent weakness in Brent (K1) opens $58.56, 38.2% of the Nov 2 - Mar 8 rally. Resistance is at $65.12, Mar 22 high. In WTI (K1), scope is for a move to $55.65, also 38.2% of the Nov 2 - Mar 8 rally. Resistance is at $62.04, Mar 22 high.
• In the FI space:
  • Bunds (M1) have probed resistance at 172.20, Mar 11 high. A clear break would open 172.51, Feb 16 high.
  • Gilts (M1) have cleared resistance at 128.33, Mar 16 high, suggesting scope for an extension higher. The next key resistance is at 129.27, Mar 2 high.
  • Treasuries (M1) remain in a downtrend and gains are considered corrective. Resistance is at 132-09, Mar 17 / 24 high.

EQUITIES: Ticking Higher, Tech Leading

• Asian stock markets closed mixed, with Japan's NIKKEI up 324.36 pts or +1.14% at 28729.88 and the TOPIX up 26.97 pts or +1.4% at 1955.55. China's SHANGHAI closed down 3.469 pts or -0.1% at 3363.592 and the HANG SENG ended 18.53 pts lower or -0.07% at 27899.61.
• European equities are mixed, with the German Dax down 25.54 pts or -0.17% at 14592.97, FTSE 100 up 10.25 pts or +0.15% at 6707.33, CAC 40 down 7.94 pts or -0.13% at 5926.1 and Euro Stoxx 50 down 8.5 pts or -0.22% at 3826.49.
• U.S. futures are up slightly, with the Dow Jones mini up 73 pts or +0.23% at 32392, S&P 500 mini up 9.5 pts or +0.24% at 3890.25, NASDAQ mini up 45 pts or +0.35% at 12839.

COMMODITIES: Oil Slips As Suez Blockage Continues

• WTI Crude down $1.01 or -1.65% at $60.19
• Natural Gas down $0 or -0.16% at $2.518
• Gold spot down $3.08 or -0.18% at $1733.04
• Copper down $9.75 or -2.4% at $396.55
• Silver down $0.16 or -0.63% at $24.9544
• Platinum down $4.01 or -0.34% at $1168.97