STIR: 86bps of ECB Cuts Priced Through '25; Neutral Report and US NFP In Focus
ECB-dated OIS are little changed from yesterday’s close, with 86bps of cuts priced through year-end. German December industrial production was much weaker-than-expected, but not a market mover. Regional focus turns to the ECB’s neutral report (1200GMT) and the US labour market data (1330GMT).
- We expect the neutral report to contextualise President Lagarde’s most recently cited neutral range of 1.75-2.25%. However, several Executive Board speakers (de Guindos, Lane, Cipollone) have played down the importance of neutral in calibrating near-term policy this week.
- The title of the report (“An update of euro area natural rate estimates: statistical uncertainties and conceptual shortcomings”) also suggests it is unlikely to contain actionable monetary policy signals.
- Euribor futures are -1.0 to -1.5 ticks through the blues.
- ECB Vice President de Guindos is scheduled to speak at 0845GMT.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Mar-25 | 2.416 | -25.3 |
| Apr-25 | 2.233 | -43.6 |
| Jun-25 | 2.044 | -62.5 |
| Jul-25 | 1.963 | -70.6 |
| Sep-25 | 1.870 | -79.9 |
| Oct-25 | 1.850 | -81.9 |
| Dec-25 | 1.809 | -86.0 |
| Feb-26 | 1.807 | -86.2 |
| Source: MNI/Bloomberg. | ||
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AUDUSD TECHS: Resistance Remains Intact
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6388 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6269/0.6302 20-day EMA / High Jan 6
- PRICE: 0.6227 @ 08:00 GMT Jan 8
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair has pulled back from Monday’s high. Recent weakness maintains the price sequence of lower lows and lower highs. Note that MA studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6269, 20-day EMA. It has been pierced. The 50-day EMA is at 0.6388.
STIR: SFRZ6/U7 Lifted
SFRZ6/U7 paper paid 6.5 on ~6.3K, initially taken bid over with a further ~3.2K trading since. Market left 6.0/6.5 last.
GILTS: Opening calls
Gilt Opening calls, 91.43/91.45.
