SOUTH AFRICA: DA Stays Committed To Coalition Pact But Red Lines Remain

Jan-29 07:30

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CROSS ASSET: Markets Pick Up Where They Left Off

Dec-30 07:18

Markets have generally picked up where they left off on Friday - although the US 10y yield has drifted off the closing high to trade back to 4.60%, a move that's likely keeping the USD pinned so far Monday, helping the likes of AUD/USD and NZD/USD to hold above the recent pullback lows.

  • Equity futures remain lower across the board, with US index futures pointing to another lower open today to build on the softer Friday close. Meanwhile Bund futures are off the lowest levels, but remain perilously close to 132.71, the December low posted at the re-opening of trade after the weekend.
  • Significant newsflow has been few and far between, with US domestic politics focusing on the internal Republican debate over H-1B visas and the passing of President Carter.
  • Focus for the duration of Monday trade will be on the MNI Chicago PMI at 1445GMT, expected to tick up to 43.0 from 40.2 previously.
  • We anticipate volumes and broader liquidity to remain very light over the coming two sessions, particularly with tomorrow's European market closures and early closes elsewhere. EUR futures are posting cumulative volumes ~30% below an already subdued average for this time of day.

BTP TECHS: (H5) Bears Remain In The Driver’s Seat

Dec-30 07:16
  • RES 4: 123.34 High Dec 11 and key resistance     
  • RES 3: 122.85 High Dec 12  
  • RES 2: 121.94 High Dec 13  
  • RES 1: 120.70/121.14 High Dec 20 / 20-day EMA   
  • PRICE: 119.85 @ Close Dec 27 
  • SUP 1: 119.41 Low Dec 27         
  • SUP 2: 119.11 Low Nov 18   
  • SUP 3: 118.80 76.4% retracement of the Nov 7 - Dec 11 bull cycle
  • SUP 4: 118.51 Low Nov 8     

A corrective cycle in BTP futures has resulted in a pullback from its recent highs and Friday’s sell-off highlights and extension of the current bear cycle.  The contract has recently breached the 20-day EMA and sights are on 118.80, a Fibonacci retracement point. Key resistance and the bull trigger has been defined at 123.34, the Dec 11 high. Initial firm resistance is seen at 121.14, the 20-day EMA.

GILT TECHS: (H5) Impulsive Bear Cycle Extends

Dec-30 07:09
  • RES 4: 94.50 High Dec 16   
  • RES 3: 93.64 High Dec 17  
  • RES 2: 93.38/59 High Dec 18 / 20-day EMA 
  • RES 1: 93.09 High Dec 21              
  • PRICE: 91.84 @ Close Dec 27
  • SUP 1: 91.64 Low Dec 19                        
  • SUP 2: 91.58 4.382 proj of the Dec 3 - 4 - 5 minor price swing
  • SUP 3: 91.45 4.500 proj of the Dec 3 - 4 - 5 minor price swing
  • SUP 4: 91.33 4.618 proj of the Dec 3 - 4 - 5 minor price swing

A strong bearish theme in Gilt futures remains in play and Friday’s move low reinforces this condition. The breach of 91.87, the Dec 19 low, confirms a resumption of the downtrend. Sights are on 91.58 next, a 4.382 projection of the Dec 3 - 4 - 5 minor price swing. Initial firm resistance is at 93.09, the Dec 20 high. Short-term gains would be considered corrective. Resistance at the 20-day EMA, is at 93.59.