BOC: Deputy Gov Rogers: Oil Shock Presents Risks To Both Growth And Inflation

0NJ6 96.60 put vs SFIJ6 96.60 put, paper buys the front and receives 0.5 and 0.25 in 16k total
 

• The Dollar index has held a relatively contained range on Tuesday, with some initial strength dissipating through US trade. Japanese yen underperformance has remained the key characteristic across FX markets following the report of PM Takaichi disapproving of the BOJ’s hiking intentions. This dynamic has led the likes of GBPJPY and NZDJPY to post near 1% advances on the session, while the EM FX basket has enjoyed the more constructive price action for the major equity benchmarks.
• Notably, this morning’s high in USDJPY (156.28) closely matched the initial resistance level at 156.29 (Feb 10 high) before spot has then consolidated back towards current levels of 155.65 as we approach the APAC crossover. A continuation higher would highlight a stronger reversal and open 157.76, the Feb 9 high.
• Late GBP strength was notable in the lead up to the WMR fix, and while the moves coincided with BOE MPC members testifying before the Treasury Select Committee, there were no new developments on the monetary policy front.
• Most notably, downside momentum for EURGBP looks to have accelerated below a collection of daily low prints from the past few sessions, prompting a fresh one-week low for the cross at 0.8708, matching initial support at the 20-day EMA.
• Elsewhere, USDCAD has continued to respect and subsequently consolidate below 1.3725, key pivot resistance, while EURCHF also operates within 25 pips of the 0.9095 cycle lows.
• Wednesday’s calendar is highlighted by Australian January CPI and President Trump’s State of the Union address. Final Eurozone inflation prints and Fed speakers are then scheduled.

Tsy futures are holding weaker - off morning lows with curves flatter (2s10s -2.119 at 56.558) ahead of the $69B 2Y note auction (91282CQB0) at 1300ET, WI currently at 3.451% -- 14.2bp rich to last month's stop.

• January recap: Tsy futures held modest gains after the $69B 2Y note auction (91282CPV7) stopped through with 3.580% high yield vs. 3.593% WI; 2.75x bid-to-cover vs. 2.58x prior.
• Peripheral stats: Indirect take-up climbed to 64.40% from 53.21% prior, directs retreated to 28.27% vs. 34.05% prior, primary dealer take-up fell to new low of 7.33% vs. 12.74% prior.