FOREX: EUR a Key Beneficiary as USD Index Breaks to New Low
Jun-12 10:55
- EUR/USD through to new YTD highs on this latest phase of USD weakness, with a clear uptick in price action, volumes and activity on the break of 1.1573, the mid-April and previous year-to-date high.
- This price action is making for solid FX futures volumes at the NY crossover: just over 3,000 EUR futures contracts traded on the break of the level - a cash equivalent of ~$570mln and easily the best volumes of the day
- We noted earlier this morning that 1.1573 was the key level, with that mark broken, 1.1608 is the 09-Nov 2021 high. We note close to E3bln notional is set to roll-off at the 1.1600 handle in EUR/USD over the coming week - the largest of which expire today and Monday.
- This keeps the downtrendline resistance intact for the USD Index, which has shown well through the April low of 97.921. There is now a near 4% premium for the 200-dma over the 50-dma for the first time since the throes of COVID in 2020 - characterising the still building S/T negative momentum in the USD.
Figure 1: USD Index 50-dma premium over 200-dma (%)
Source: Bloomberg Finance L.P. / MNI
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US TSYS: TYA Eyes Latest Support Ahead Of CPI
May-13 10:55
- Treasuries broadly consolidate yesterday’s sell-off on US-China trade de-escalation ahead of today’s US CPI report for April.
- MNI US CPI Preview here.
- Cash yields are 0-2.5bp lower on the day, with declines led by 2s/3s and with 20s lagging the move.
- 2s10s at 46.7bp and 5s30s at 81bp sit within some wide recent ranges.
- TYM5 trades at 110-06 (+01), maintaining the softer tone on modest cumulative volumes of 290k.
- Yesterday’s low of 110-01+ met latest support at a 76.4% retracement of the Apr 11 – May 1 bull leg, after which lies a key 109-08 (Apr 24 low). To the upside, resistance at 111-04+ (20-day EMA).
- Some recent downside flow: TYN5 109.00/108.00 put spread 20K lots blocked at 0-14 (05:32:08ET) following 21K of the FVN5 107.00/106.25 put spread being blocked through the London morning.
- Data: US CPI Apr (0830ET), Real avg earnings Apr (0830ET)
- Fedspeak: None scheduled
- Bill issuance: US Tsy $48B 52W & $70B 6W bill auctions (1130ET)
OUTLOOK: Price Signal Summary - Key Support In Gold Remains Intact For Now
May-13 10:53
- On the commodity front, the latest pullback in Gold appears corrective. Key short-term support to watch is $3202.0, the May 1 low. A clear break of this level would undermine the short-term bullish theme and signal scope for a deeper retracement. This would open $3164.3, 61.8% of the Apr 7 - Apr 22 upleg. Note that the 50-day EMA is at $3161.0. The medium-term trend condition remains bullish, a reversal would refocus attention on $3500.1, the Apr 22 high and bull trigger.
- In the oil space, a downtrend in WTI futures remains intact and short-term gains are considered corrective. For now, the corrective cycle remains in play and price has traded through the 20-day EMA. Key resistance to watch is $63.55, the 50-day EMA, a clear break of this level would highlight a stronger reversal. This would open $66.41, the Apr 4 high. For bears a reversal lower would refocus attention on $54.67, the Apr 9 low and bear trigger.
US TSY OPTIONS: Large Jun'25 10Y Put Spread
May-13 10:51
- over 40,000 TYM5 108/109 put spds, 5 ref 110-06.5 to -06 on screen, expire 5/23.
- Same strikes as July put spread blocked earlier: 20,000 TYN5 108/109 put spds, 10
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