FOREX: DXY Reaches Highest Level Since April 07, Back Above 100.00
Jun-05 16:26
* While bitcoin's first test below $60k since October 2024 has seen a swift bounce, both equities ...
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FOREX: NZDUSD Hits Multi-Month High on Latest Sign of Growing Iran-US Deal Odds
May-06 16:21
- A fresh round of optimism over the near-term prospects of a US-Iran deal was triggered by an Axios report said to say the two sides were nearing agreement on a 'one-pager' that could set the course for an end to the conflict. How viable the one-pager will be may become clear ahead of Trump's visit to Beijing next week (May 14 - 15) - before which the President is likely to want to engage in positive discussions on trade.
- The USD traded weaker on the subsequent risk rally, helping boost NZD/USD further, which hit 0.5991 for a fresh multi-month high. EURUSD's parallel rally stopped out into the 1.1800 handle, above which 1.1849 marks the April 17 high and bull trigger. This keeps the near-term outlook constructive.
- EURJPY traded well off lows, despite strong evidence of further Japanese intervention. The cross touched 182.05 in the initial pullback, but a global equity rally on Iran de-escalation boosted the cross near 200 pips off lows through the European close.
- The latest leg lower for the USD again has USDCNH pressuring new May lows, narrowing the gap with 6.8059. It's at these levels that Chinese authorities may again begin to work to contain unwarranted CNY strength as the exchange rate approaches the strongest levels in over three years.
- While the Bank are unlikely to resort to broad measures like rate cuts to target the FX rate specifically, there remain a number of 'macroprudential adjustment parameters' that could be leant on to work against unwanted CNY appreciation - namely tweaks to banks' interactions with FX forwards via a higher FX Reserve Requirement Ratio or by lower FX forward deposit requirements - freeing up FX funding in the process.
- US weekly claims and construction spending data cross tomorrow. Thursday also sees a busy central bank schedule. ECB's Kocher, Muller, Villeroy, de Guindos & Schnabel all make appearances at a London conference, while Fed's Kashkari & Hammack also speak.
SOFR OPTIONS: Large Dec Midcurve Call Spread Sale
May-06 16:18
- -50,000 0QZ6 97.50/98.00 call spds around 2.75, reportedly an exit
FED: US TSY TO SELL $42.000 BLN 10Y NOTES MAY 12, SETTLE MAY 15
May-06 16:05
- US TSY TO SELL $42.000 BLN 10Y NOTES MAY 12, SETTLE MAY 15
