FOREX: EUR Still Key Beneficiary in Soft USD Environment
Jun-12 09:32
- A poor monthly GDP release from the UK works further in favour of a sell-on-rallies theme for GBP, most evident in the return higher for EUR/GBP and the (initial) slippage for GBP/USD this morning, which has prevented a material test on 1.3600 so far. A technical correction lower would target 1.3504 ahead of layered support between 1.3434-44, marked by a series of historic highs (Sep'24, Apr'25) as well as the 38.2% retracement of the upleg off mid-May low. For EUR/GBP, the break higher has been exacerbated by a break of resistance at 0.8442, the 50-day EMA, highlighting a stronger reversal. 0.8541 will likely garner attention next, the May 2 high.
- A returning soft-USD theme continues to dictate play, with Trump's confirmation of incoming unilateral tariffs on countries without a trade deal affirming the year's USD downtrend.
- The EUR remains a key beneficiary of this market backdrop, with momentum boosting EUR/USD through the post-ECB peak at 1.1495, confirming an extension of the current bull cycle. Sights remain firmly on 1.1573 (Apr 21 high and bull trigger), even as gains for EUR/JPY have begun to slow.
- Softer risk sentiment stemming from increased geopolitical tensions around Iran headline are largely responsible, as President Trump talks down the likelihood of a nuclear deal with Iran, and reports continue to circulate of a potential Israeli operation on the region to stem Tehran's nuclear ambitions.
- After a string of weak releases, the weekly jobless claims data due today will be watched for any further signs of softness which, if backed up by a miss on expectations in today's PPI, would add to the downside dollar argument.
- ECB speak is plentiful, with Schnabel, Patsalides, Muller, de Guindos all on the docket. The Fed remain inside their pre-decision media blackout period.
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GERMAN DATA: ZEW Beats Consensus But Remains Below March Recent High
May-13 09:30
The German ZEW expectations index rose from -14.0 to 25.2 in May, outperforming consensus of 11.3 but remaining below March's 3-year high of 51.6. The current conditions index meanwhile disappointed as it deteriorated slightly from -81.2 to -82.0 (consensus -77.0).
- The improvement in expectations comes after global trade tensions eased following the 90-day US tariff pause announced by the US administration on Apr 9. The German DAX index has erased its losses seen initially after 'Liberation Day' on April 2 and traded at all-time highs yesterday.
- The survey of 191 analysts was conducted May 5-12.
- The ZEW index is based on a survey of "experts from banks, insurance companies and financial departments of selected corporations [which] have been interviewed about their assessments and forecasts for important international financial market data" - so the index can exhibit elevated levels of correlation with German stock indices as the DAX.
EQUITIES: Large Deutsche Bank Put Option
May-13 09:21
DBK (19th Sep) 10p, bought for 0.08 in 25k.
SONIA: SFIZ5 96.40/96.80 Call Spread Lifted vs. 96.00 Puts
May-13 09:17
SFIZ5 96.40/96.80 call spread vs. 96.00 puts paper paid 2 on 5K, buying the call spread.
