EURJPY TECHS: Corrective Gains

Italy, the Netherlands, Germany, Greece, and Spain look to hold auctions in the upcoming week. We also have a scheduled syndication from the EU and pencil in syndications from Austria, Ireland and France (see prior bullet). We pencil in estimated gross issuance for the week at E45.6bln, down from E61.5bln last week.

• Italy will look to kick issuance off for the week today with a 3/7 year BTP auction which sees both on-the-run issues reopened as expected. Note that the 15+ year portion of the auction has been cancelled due to the dual-tranche syndication on 8 January. On offer will be E2.50-2.75bln of the 2.70% Oct-27 BTP (ISIN: IT0005622128) and E2.75-3.00bln of the 3.15% Nov-31 BTP (ISIN: IT0005619546).
• The EU has a syndication scheduled for the week ahead. We think the most likely new issues are 10-year, 3-year or 20-year (in that order).
• Tomorrow, the Netherlands will sell E1.5-2.0bln of the on-the-run 30-year 2.00% Jan-54 DSL (ISIN: NL00150012X2).
• Also tomorrow, Germany will issue E5bln of the new Apr-30 Bobl (ISIN: DE000BU25042). The coupon will be confirmed later today.
• On Wednesday, Greece will hold a GGB auction. The details will be announced tomorrow.
• On Wednesday, Germany will return to the market to sell E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614) alongside E1.5bln of the 30-year 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
• On Thursday, Spain will hold a Bono/Obli auction. On offer will be the on-the-run 5-year 2.70% Jan-30 Bono (ISIN: ES0000012O00), the 0.85% Jul-37 Obli (ISIN: ES0000012I24) and the 1.00% Oct-50 Obli (ISIN: ES0000012G00). We pencil in a E5.5-6.5bln auction size – with the size to be announced later today.

NOMINAL FLOWS: This week sees E10.1bln of redemptions from an Italian CCTeu. Coupon payments for the week total E5.5bln of which E4.1bln are Dutch and E1.3bln Italian. This leaves estimated net flows for the week at positive E30.0bln, vs positive E57.5bln last week.

For more on last week's issuance and a look ahead to next week see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.

• RES 4: 5097.00 High Oct 14
• RES 3: 5080.00 High Oct 15      
• RES 2: 5068.13 0.764 proj of the Nov 21 - Dec 9 - 20 price swing   
• RES 1: 5054.00 High Jul 8          
• PRICE: 4980.00 @ 06:34 GMT Jan 13  
• SUP 1: 4935.7150-day EMA       
• SUP 2: 4829.00 Low Dec 20 and key short-term support     
• SUP 3: 4800.87 76.4% retracement of the Nov 21 - Dec 9 bull cycle 
• SUP 4: 4775.00 Low Nov 29 

A bull cycle in the Eurostoxx 50 futures contract remains intact and price is trading closer to its recent highs. Last week’s rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this hurdle would confirm a resumption of the bull cycle that started on Nov 21 and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4935.71, the 50-day EMA.

• RES 4: 0.8494 High Aug 26 ‘24 
• RES 3: 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg  
• RES 2: 0.8448 High Oct 31 and reversal trigger
• RES 1: 0.8424 50.0% retracement of the Aug 8 - Dec 19 downleg
• PRICE: 0.8409 @ 06:46 GMT Jan 13
• SUP 1: 0.8318/8284 50-day EMA / Low Jan 8 
• SUP 2: 0.8263 Low Dec 31
• SUP 3: 0.8223 Low Dec 19 
• SUP 4: 0.8203 Low Mar 7 2022 and a major support

EURGBP traded sharply higher last week and remains firm. The cross has breached resistance at the 50-day EMA, and cleared the December highs. This undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. Sights are on 0.8424, a Fibonacci retracement. Support at the 50-day EMA is at 0.8318.