FOREX: CHF Stands Out as Core CPI Works Against SNB Base Case
Feb-13 10:31
- CHF stands out among G10 FX early Thursday, rallying against all others on the back of the January inflation release. While headline CPI was inline with market expectations, the core figure outstripped forecast to hit 0.9% vs. Exp. 0.6%, dragging USD/CHF with it and narrowing the gap with tried-and-tested support at the 50-dma of 0.9039.
- We note trendline support also comes in just above 0.9040, but it is the 50-day exponential moving average that remains key on the downside, having underpinned the significant rally in the aftermath of the US election. Despite multiple attempts in recent weeks, USDCHF has continually failed to close below this average, which currently intersects at 0.9024. Below here, the January low is at 0.8965.
- AUD sits at the bottom-end of the G10 table, led lower by deteriorating risk sentiment into the Asia-Pac close. Hong Kong's Hang Seng Index started the session well, but a turn lower for equities has worked against AUD/USD and pressed the rate back to the 50-dma of 0.6260.
- The USD Index is softer, edging lower as markets extend the reaction to Trump's opening of Ukraine negotiations with Russia's Putin late yesterday. The USD Index is toward the February lows, but a further 0.5% decline would be needed before any test of 107.296 and 106.969 support.
- The US PPI print and weekly claims data are the datapoints of focus ahead, while the central bank speaker slate is much quieter - just ECB's Nagel is on the docket, appearing in Glasgow at 1700GMT/1200ET.
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EURGBP TECHS: Bull Cycle Remains In Play
Jan-14 10:31
- 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: 0.8424/29 50% of the Aug 8 - Dec 19 downleg / Intraday high
- PRICE: 0.8420 @ 10:30 GMT Jan 14
- SUP 1: 0.8321/8284 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 maintains a firmer tone. The cross has 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. It has been pierced, a clear break of this level would open 0.8448, the Oct 31 high. Support at the 50-day EMA is at 0.8321.
BUNDS: Bund and EGBs are still drifting lower
Jan-14 10:31
- New lows for EGBs, Bund, BTP and OAT are all testing their respective lows, BTP still outperforms on the margin.
- For the German 10yr yield, next upside target is still eyed at 2.642%, the July high, this level equated to 130.56 on Friday, 130.50 Yesterday, and it is again lower today, down to 130.47 (reference 130.68).
EGB OPTIONS: Bund call spread
Jan-14 10:21
RXH5 135/136cs bought for 4.5 in 7.5k.
