US 10YR FUTURE TECHS: (M5) Tests Key Resistance
- RES 4: 112-23+ 1.618 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 3: 112-15 61.8% of the Sep 11 ‘24 - Jan 13 bear cycle (cont)
- RES 2: 112-13 1.500 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 1: 112-02+ High Apr 02
- PRICE: 111-17+ @ 17:08 BST Apr 2
- SUP 1: 110-26+ 20-day EMA
- SUP 2: 110-11/06 50-day EMA / Low Mar 27
- SUP 3: 110-00 High Feb 7 and a key support
- SUP 4: 109-21+ Trendline support drawn from the Jan 13 low
Treasury futures are holding on to their latest gains following the recovery from last week’s low of 110-06+ (Mar 27). The outlook remains bullish and attention is on key resistance at 112-01, the Mar 4 high. It has been pierced, a clear break would confirm a resumption of the uptrend and maintain a price sequence of higher highs and higher lows. This would open 112-13, a Fibonacci projection. Initial support to watch is 110-26+, the 20-day EMA.
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OPTIONS: Expiries for Mar04 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0300(E1.0bln), $1.0375-85(E1.3bln), $1.0400(E691mln), $1.0450-55(E873mln), $1.0480(734mln), $1.0520-30(E1.9bln), $1.0545-50(E884mln)
- USD/JPY: Y148.30($686mln), Y148.90-00($555mln)
- AUD/USD: $0.6335(A$1.2bln)
- USD/CAD: C$1.4315-25($1.2bln), C$1.4395-10($2.0bln), C$1.4425($529mln)
- USD/CNY: Cny7.2610($574mln)
STIR: ISM Mfg Helps Steer Fed Rates Back Towards Recent Dovish Extremes
- Fed Funds implied rates hold most of their decline with the dust settled on the ISM manufacturing survey, which firmly contradicted the “noticeable upturns in both production and new orders” seen in the US S&P Global PMI.
- Whilst a cut on Mar 19 is still seen as firmly off the table, there is now 9.5bp of easing priced for March (+2bp post-ISM) whilst the 67bp of cuts for 2025 (+3bp) is back close to last week’s recent dovish extremes of 70bps.
- For recent context, 2025 cut expectations have ranged from 25bp after the January CPI report on Feb 12 and pricing is back close to levels prior to the hawkish Dec 18 FOMC decision which includes a dot plot with a median 50bp of cuts for the year.
SEK: Fresh Wave Of Strength Prompts Breach Of 0.9500 In NOKSEK
SEK has seen a fresh wave of buying interest over the past ~60 minutes, helping NOKSEK push through key multi-year support at 0.9500, now 1.1% lower today at 0.9462. A close below 0.9500 would be an important bearish development and expose the November 2020 low at 0.9274 as the next downside target.
- The 0.9500 level has capped downside in the cross three times since mid-2023, while also providing support back in 2016.
- EURSEK is also through the Feb 22nd 2024 of 11.1385, exposing the December 2023 low at 11.0030.
- There hasn’t been an obvious headline trigger for the latest wave of SEK strength, though Bloomberg did run a piece on the role of increased defence spending prospects in supporting the krona at 1440GMT: {NSN SSCBLZDWRGG0 <GO>}
- While we sympathise with the argument that Sweden’s economy and the krona can benefit from increased Eurozone defence spending (Swedish defence exports as a % of nominal GDP are higher than the likes of France, Germany, the UK and the US according to data from the UK Govt and the IMF), it’s worth noting that a similar argument could also be made for Norway – see chart. That fact hasn’t provided a similar tailwind to the NOK today.
- Today’s 11% rally in Saab shares on the OMX30 has been joined by a 16% rally in Kongsberg Gruppen shares on Oslo Børs.
- The next key Swedish data release is February flash inflation on Thursday, particularly following the much stronger than expected January reading.
