POWER: France January Power to Pull Back
The French January power is expected to pull back today, once trading, with downside from milder, windier weather and a sharp pullback in the European energy complex. French spot power is expected to trade higher with lower wind and higher demand.
- France Base Power JAN 25 closed down 1.4% at 87.09 EUR/MWh on 13 Dec.
- EUA DEC 24 down 1.1% at 63.74 EUR/MT
- TTF Gas JAN 25 down 2.5% at 40.17 EUR/MWh
- Nuclear availability in France was rose to 88% of capacity as of Monday morning, up from 85% on Friday, RTE data showed, cited by Bloomberg.
- Planned maintenance at 890MW Dampierre 4 has been shortened to end on 28 Dec, from 5 Jan previously scheduled.
- The latest 6-10 day ECMWF weather forecast for Paris suggested mean temperatures have been revised up to remain above the seasonal average during the forecast period, with a small dip in temperatures on 20 December.
- Mean temperatures in Paris are forecast to decline to 6.5C on Tuesday, down from 9.2C on Monday and above the seasonal average of 5C.
- Power demand in France is forecast to rise to 63.72GW on Tuesday, up from 63.18GW on Monday according to Bloomberg.
- Wind output in France is forecast to decrease to 3.58GW during base load on Tuesday, down from 4.08GW forecasted for Monday according to SpotRenewables.
- Residual load in France is forecast to rise to 61.49GWh/h on Monday, up from 59.15GWh/h on Monday according to Reuters.
- France’s hydro balance has been revised down from Friday’s forecast with the balance to end at -784GWh on 30 December.
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US OUTLOOK/OPINION: US Macro Weekly: Fed Shifts Hawkish As Disinflation Stalls
Our weekly US Macro publication is out (PDF):
- US “Inflation Week” brought largely in-line results, with sequential core CPI coming in a little lower than expected, and headline CPI and core PPI a little higher than expected.
- But overall the takeaway was that there was relatively little if any disinflationary progress in October, exacerbated by what looks like a small sequential acceleration in the core PCE reading for the month.
- The cumulative effect of surprisingly hawkish Fed commentary combined with the slight upside in core PCE (with a helping hand from solid initial jobless claims among other data demonstrating continued resilience) saw a notable shift in rate cut pricing this week.
- The December FOMC meeting appears to be "live", nearing 50/50 implied probability of a hold at one point Friday morning, versus closer to 20% at the start of the week.
- At the end of this document we highlight two major shifts in FOMC tone this week: one is that a "pause" was introduced as a possibility by a senior FOMC member (Gov Kugler); the other is that there is growing concern over the implications of soaring longer-end rates.
- Neutral rate-talk also dominated, and in a hawkish direction - Dallas Fed's Logan mused that the Fed had already perhaps already reached neutral rates.
- It's probably still the case that the FOMC is still in the "thinking about thinking about slowing rate cuts" stage, which means a December cut is the default. But some of the groundwork for a less dovish rate cut path appears to have been laid since the US election (the potentially hawkish implications of which, FOMC members didn't venture into).
- This week’s heavy data slate gives way to a quieter schedule Nov 18-22, with key macro highlights including flash November PMIs and housing market data, with FOMC speakers also of interest after this week’s shift (including Cleveland Fed Pres Hammack).
US OUTLOOK/OPINION: Atlanta Fed GDPNow Steady, PCE Upgraded Despite Control Miss
The Atlanta Fed's GDPNow estimate for Q4 remained steady at 2.5% Q/Q annualized in the Nov 15 update, reflecting higher personal consumption expenditures (now 2.8% vs 2.7% in the prior day's update), offset by downgrades to equipment/ nonresidential structure investment.
- The stronger PCE figure comes despite a softer-than-expected Retail Sales Control Group figure - we think this is a reflection of the higher revision to September's Control Group, which will statistically carry over into the Q4 growth rate.
USDCAD TECHS: Bull Cycle Extension
- RES 4: 1.4210 2.0% 10-dma envelope
- RES 3: 1.4140 1.500 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4122 3.0% Upper Bollinger Band
- RES 1: 1.4106 High Nov 15
- PRICE: 1.4077 @ 16:54 GMT Nov 15
- SUP 1: 1.3959 High Nov 1 / 6
- SUP 2: 1.3891/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 3: 1.3785 50-day EMA
- SUP 4: 1.3611 Low Oct 8
A strong rally in USDCAD this week reinforces the current bullish condition. The pair has topped 1.3959, the Nov 1 / 6 high. This break confirms a resumption of the uptrend and has also resulted in a breach of 1.3977, the Oct 13 2022 high. 1.4140 marks the next upside level. Initial firm support to watch lies at 1.3891, the 20-day EMA. A short-term pullback would be considered corrective.
