OIL: Crude Option Skew Call Bias Eases As Risk Premium Fades

RXG6 126.50/124.50ps, bought for 27.5 in 6k.

• The Dollar index is 0.1% in the red Tuesday, hovering just above the recent pullback lows as we approach the return of tier-one data from the US later today. GBP outperforms across the G10 following UK labour market data that showed higher-than-expected wage data, while risk-off sentiment overnight has moderately boosted the yen. Both French and German flash services PMIs were a touch weaker-than-expected but have done little to move the EUR needle this morning.
• GBP added to the morning's gains on the back of a firm UK PMI print, with GBPUSD comfortably clear through yesterday's highs above the 1.34 handle. Price action narrows the gap with major resistance into 1.3438 - the multi-month high. Meanwhile, EURGBP has slipped 0.2% in tandem, and with current spot levels of 0.8771, may have further to run towards last week’s lows at 0.8720.
• Weakness for major equity benchmarks across the APAC session, led by tech names, has boosted the Japanese yen, with USDJPY slipping to a new weekly low of 154.68. Despite the underlying bullish theme for USDJPY, support at 154.00, the 50-day EMA, remains exposed. A clear breach of this average would undermine the bull theme and signal scope for a deeper retracement.
• While the Euro has not been impacted by today’s flash PMI’s, EURUSD is consolidating close to recent highs around 1.1760. With multiple tier-one data releases from the US upcoming, as well as the ECB decision, market attention will be firmly on the pair. Recent gains have reinforced a bull theme highlighting potential for an extension higher. Sights are on 1.1779 next, the October 1 high.
• All focus on US data later today, with a double release of NFP included in the employment report, alongside retail sales data for October.

Gilt futures recover after registering fresh lows around the bidding deadline for the Mar-31 gilt auction, with solid auction results helping the space to find a base.

• While this morning’s firmer-than-expected wage and PMI data doesn’t alter the outlook for Thursday’s BoE decision, it did provide a marginal hawkish impulse for markets beyond that event.
• Wages are still on track to ease in line with BoE estimates, but an extended run of similar PMI readings over the next few months would add to the hawks' argument that inflation could be stickier than expected.
• Futures base at 90.83, last -34 at 90.95.
• Initial technical parameters in the contract remain unchanged
• Recent price action in futures highlights 90.53, the Nov 25/26 low, and 91.93, the Nov 27 high, as the important short-term directional triggers.
• Yields 1.5-2.5bp higher, curve a little steeper on the day.
• 10s 3bp wider vs. Bunds on the day at 167bp, after the spread failed to break below the September ’24 closing low (162.01bp) during the recent round of narrowing.
• Widening vs. Bunds comes on the combination of the aforementioned UK data and soft German PMIs.
• SONIA futures now flat to -4.0, also trading a little steeper after the data, with the front end pinned by ongoing expectations for a cut on Thursday.
• BoE-dated OIS prices 22bp of easing for Thursday and 59bp through end ’26 (vs. ~61.5bp late yesterday).
• Tomorrow’s CPI data presents the next key domestic input for STIR pricing, with U.S. NFP data due in the interim.