EMERGING MARKETS: CEEMEA FX Price Signal Summary - EURPLN Rally Extends
Oct-07 10:53
- EURHUF is holding on to its recent gains and bulls remain in the driver’s seat. Last week’s gains resulted in a breach of 399.21, the Aug 5 high, and 399.75 the Mar 12 high. These two levels represented a key hurdle for bulls and the break confirms a resumption of the medium-term uptrend. With the 400.00 handle cleared, scope is seen for an extension towards 402.45 next, the Mar 20 high. Further out, sights are on 404.35, the Jan 3 high, and 408.77, the 61.8% retracement of the Oct 2022 - Jun 2023 bear leg. Initial firm support lies at 39683, the 20-day EMA.
- EURPLN is rallying again, today as the cross extends the bull cycle that started on Sep 25. The cross has cleared resistance at 4.3043, the Sep 12 high. The clear break is bullish and opens 4.3309, the Aug 9 high and the next key resistance. Clearance of this level would open 4.3460, the Jun 19 high. Initial firm support is at 4.2864, the 50-day EMA. First support is at the Sep 12 high of 4.3043.
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US TSYS: Short End Leads Post-NFP Rally Despite Faded 50bp Sept Cut Prospects
Sep-06 20:05
The short-end led a Treasury rally in a busy Friday session, despite a fading of the initial dovish reaction to soft nonfarm payrolls data.
- The week's main event August employment report showed both a miss in nonfarm payrolls growth (142k vs 165k cons) and heavy downward revisions to the prior 2 months (-86k), alongside a slight downtick in the unemployment rate.
- That spurred a sharp bull steepening in the curve as a 50bp September Fed cut regained 50% implied probability.
- Comments 15 minutes after the NFP release by NY Fed Pres Williams were seen as noncommittal on 25 vs 50bp, and yields reversed steadily from session lows to session highs.
- Gov Waller's speech at 1100ET saw a renewed Treasury bid, as headlines emerged that he could support a "front-loaded" cutting cycle - but it soon became clear that this was a hypothetical and, like Williams, didn't seem particularly pro-50bp for Sept.
- The net impact was that September pricing was trimmed to 32bp of cuts, (4-5bps fewer than seen pre-payrolls), but short-end Treasuries still ended much stronger as futures saw more cuts overall: 2.5bp extra by end-2024 (to 113bp cumulative) and 12bp of extra cuts due by Jun’25 (221bp).
- 2s10s closed the week comfortably in positive territory for the first time since 2022, rallying 7bp on the day.
- We won’t get any more Fed communications due to the pre-FOMC blackout – but for observers clinging on to the possibility of a 50bp September hike, next Wednesday’s CPI release could be eyed as a tiebreaker.
- Latest levels: The Dec 24 T-Note future is up 6.5/32 at 114-30.5, having traded in a range of 114-10 to 115-13. The 2-Yr yield is down 8.7bps at 3.6565%, 5-Yr is down 4.3bps at 3.4938%, 10-Yr is down 1.5bps at 3.7117%, and 30-Yr is unchanged at 4.0198%.
USDCAD TECHS: Bear Trend Intact
Sep-06 20:00
- RES 4: 1.3646 High Aug 15
- RES 3: 1.3641 50-day EMA
- RES 2: 1.3574 20-day EMA
- RES 1: 1.3565 High Sep 03
- PRICE: 1.3530 @ 16:02 BST Sep 06
- SUP 1: 1.3441 Low Aug 28 and the bear trigger
- SUP 2: 1.3420 Low Mar 08
- SUP 3: 1.3358 76.4% retracement of the Dec 27 - Aug 5 bull leg
- SUP 4: 1.3288 Low Jan 05
Recent gains in USDCAD appear to have been a correction and the recent impulsive sell-off, in August, reinforces a bearish condition. Note too that moving average studies are in a bear-mode set-up, highlighting a dominant downtrend. A resumption of bearish activity would signal scope for a move towards 1.3358, a Fibonacci retracement. On the upside, initial firm resistance to watch is at 1.3574 the 20-day EMA.
OPTIONS: Friday SOFR Option Flow Roundup
Sep-06 19:35
Friday's SOFR options flow included:
- SFRU4 95.12/95.06ps traded 3.5 in 3.5k.
- SFRU4 95.06/95.18cs 2x3, traded 5.25 and 5.5 in 2.5k.
- SFRU4 95.12/95.25cs traded 4.5 and 4.75 in 6.5k.
- SFRU4 95.25/95.37cs 1x2 traded 1.5 in 5k.
- SFRU4 95.25/95.31cs, bought for 1 I 12k total
- SFRU4 95.2595.31/95.37/95.43c condor, traded 1.25 in 6.5k.
- SFRU4 95.50c traded half in 10k.
- SFRU4 95.12c sold at 4.75 in 12k total.
- SFRU4 95.25c sold at 1.25 in 10k
- SFRU4 95.12 call vs 9512.25 sold at 4.75 in 15k all day
- SFRU4 95.00/95.12/95.25 cfly sold at 4 in 2.5k
- SFRU4 94.93/95.50 traded 0.25 for the c in 6k. (risk reversal)
- SFRU4 95.18/95.12/95.06p ladder traded 0.75 in 2.5k. (block)
- SFRU4 95.18/95.31cs traded 3.25 and 3.5 in 10k. (block)
- SFRV4 95.50p, traded 1.25 in 8.5k.
- SFRZ4 95.50p, traded 4.5 in 7.5k.
- SFRZ4 95.87/96.12/96.87c ladder vs 95.25p traded 2.25 and 2.5 in 5k.
- SFRZ4 96.12/96.25cs 2x3 traded 10 in 5k. (block)
- SFRH5 96.31/96.00ps 2x3 traded 12.5 in 5k.
- SFRM5/0QM5 97.50c, spread, traded for -6 in 5k.
