POWER: Nordic Forward Curve to Possibly Trade in Red
The Nordic forward curve may face downward pressure -once it becomes liquid – amid losses in TTF and neigbouring Germany. Above seasonal temperature forecasts in theregion starting from 21 February until at least 6 March could also reduce demand and ease pressure on hydro stocks. However, downward revisions of the hydro balances in Norway and Sweden are supportive.
- Nordic Base Power MAR 25 settled down 1.8% at 38.6 EUR/MWh on 19 Feb.
- France Base Power MAR 25 down 4% at 71.23 EUR/MWh
- Germany Base Power MAR 25 down 1.5% at 87.3 EUR/MWh
- EUA DEC 25 down 1.2% at 73.14 EUR/MT
- TTF Gas MAR 25 down 2% at 47.305 EUR/MWh
- The Norwegian hydro balance is expected to be lower over 23 Feb-6 March, with downward revisions seen as around 450GWh from previous forecasts. The balance is anticipated at +7.77TWh on 6 March compared to +7.98TWh previously estimated.
- Sweden’s hydro balance is expected at +4.02TWh on 6 March compared to +4.35TWh in the previous estimate.
- Nordic hydropower reserves fell at their fastest pace this year to reach just above 60% of capacity to be at 60.6%, or 76.98TWh at the end of week 7. Stocks were pressured amid stronger demand and lower precipitation in the region.
- But reserves could slow their pace of decline this week amid warming temperatures and higher hydro balances towards March.
- Rainfall in the Nordics will be on a general upward trend throughout the 6–10-day ECMWF forecasts, with forecasts suggesting precipitation to be relatively in line with the 30-year average.
- Average temperatures in the region have been mostly revised up over 20-25 February and will flip above the seasonal average on 21 February and remain until 6 March.
- Closer in, Norwegian wind is forecasted at 2.47GW on 21 February, or an 47% load factor, up from today's 2.15GW forecast, which could place downward pressure on delivery.
- Nordic nuclear capacity was at 100% capacity on Thursday morning, unchanged on the day, according to Bloomberg. 11 of the 11 units are still online.
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SILVER TECHS: Scope For Gains Near-Term
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.974 - HIgh Jan 16
- PRICE: $30.490 @ 08:19 GMT Jan 21
- SUP 1: $29.509/28.748 - Low Jan 13 / Low Dec 19 and bear trigger
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play - for now - and recent gains appear corrective. However, the metal traded higher last week suggesting scope for a continuation near-term. An extension would expose key resistance at $32.338, the Dec 12 high. Clearance of this level would signal a reversal. On the downside, support to watch is $29.509, the Jan 13 low, and $29.748, the Dec 19 low and the bear trigger.
UK DMO UPDATE: Consultation Findings
The DMO has released the minutes of yesterday's consultations with gilt market participants. The findings surrounding issuance preferences are outlined below:
- There was GEMM support for "a reduction in the duration of conventional gilt issuance in 2025-26 relative to the current year [...] some attendees cited declining structural demand for gilts from the UK pension sector as a factor in their recommendation to reduce long issuance."
- "Mixed views were expressed about the number and sizes of syndications that could be scheduled in 2025-26, although most participants were supportive of their continued use next year. There were also isolated calls for auctions to be scheduled less frequently but in larger sizes than in 2024-25."
- "A number of attendees suggested that the proportion of index-linked gilt issuance could again be set at a reduced level in 2025-26 relative to previous years"
- "Attendees noted the importance of maintaining some flexibility in the delivery of the remit [...] calls for more regular use of gilt tenders as a means to deliver financing in response to demand and market conditions."
- "Continued issuance of green gilts next year was supported by attendees"
- "Some participants recommended that the average sizes of gilt auctions could be increased in 2025-26 relative to the current year, with a few suggestions that individual gilt lines could also be built to larger sizes."
- "A number of attendees suggested that issuance of Treasury bills should make a positive net contribution to financing in 2025-26"
- "The DMO's financing remit for 2025-26 will be published alongside the Spring forecast on 26 March 2025, following an updated OBR EFO"
USDCAD TECHS: Breaches Support
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4564 3.500 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4516 Intraday high
- PRICE: 1.4439@ 08:16 GMT Jan 21
- SUP 1: 1.4261 Low Jan 20
- SUP 2: 1.4230 50-day EMA
- SUP 3: 1.4120 Low Dec 11
- SUP 4: 1.4011 Low Dec 5
USDCAD price action is volatile this week. A sharp sell-off yesterday resulted in a print below support at 1.4280, the 20-day EMA. Price has also traded through the 20-day EMA, at 1.4359. The pullback was short-lived and today’s reversal higher has delivered a fresh trend high of 1.4516. This highlights the fact that the uptrend remains intact and a continuation higher would open 1.4539, a Fibonacci projection. 1.4230, the 50-day EMA, marks key support.
