FOREX: EURCHF Edges Further Away From 0.9200 Following False Break
Nov-19 09:55
- Alongside the yen, the Swiss Franc underperformed across the G10 on Tuesday, assisting EURCHF further away from the recent false break below 0.9200. Given the significance of the cluster support around this mark, the rejection and subsequent reversal bolster the argument for a stronger recovery.
- Indeed, EURCHF gains are moderately extending today, and a higher close would mark a fourth day of gains. A break above the 50-day EMA, which intersects at 0.9293, would then target downtrend resistance at 0.9334.
- While the USD index was able to momentarily recover past the Aug 01 high, USDCHF remained shy of its corresponding target. This level remains around 2% from current spot levels, at 0.8171.
- Next week’s sport event adjusted GDP will be a final reading, meaning that the domestic calendar remains light until November CPI on Dec 03. The final SNB meeting of the year is on Dec 11.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OUTLOOK: Price Signal Summary - S&P E-Minis Trend Signals Remain Bullish
Oct-20 09:54
- In the equity space, recent weakness in S&P E-Minis appears corrective - for now. Price has pierced support at the 50-day EMA, currently at 6615.80, but this support area remains intact. Note that the Oct 10 low of 6540.25 marks the key short-term support. Clearance of this level would undermine a bull theme. Moving average studies continue to remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Oct 9 high.
- The trend direction in EUROSTOXX 50 futures remains up and the latest pullback appears to have been a correction. The contract is trading above key support at 5498.73, the 50-day EMA. A clear break of the 50-day average is required to highlight a stronger reversal. On the upside, the bull trigger is unchanged at 5689.00, the Oct 2 high. Clearance of this hurdle would confirm a resumption of the uptrend.
EQUITY OPTIONS: BNP outright Put buyer
Oct-20 09:48
BNP (20th Mar) 68p, bought for 4.70 in 1k.
BONDS: 10-year Gilt/Bund Spread Narrows 1.5bps, Sep 24 Support In View
Oct-20 09:41
The 10-year Gilt/Bund spread is 1.5bps narrower at ~193.5bps. Initial support is the Sep 24 close around 192bps, clearance of which would bring the spread to its tightest since mid-August and expose the August 1 close at 184.5bps. Aggregate moves have been relatively contained this morning, with the UK and Eurozone data calendar picking up later in the week.
- There are a few drivers of Gilt outperformance versus Bunds over the past week:
- On the monetary policy/data side, last week’s UK labour market data was soft, while Governor Bailey retained optionality for a Q4 rate cut.
- On the fiscal side, there are some expectations that the UK’s "fiscal black hole" won’t be quite as large as was previously feared, alongside speculation that Chancellor Reeves may increase fiscal headroom above the c. GBP10bln seen in the last two fiscal events.
- Fiscal policy remains a key focus for the Gilt market ahead of the Nov 26th budget. The main fiscal headlines from the weekend have suggested that VAT may be removed from energy bills.
- UK yields are little changed across the curve, while German yields are up to 1.5bps higher with a light bear steepening bias noted.
- In futures, Bunds are -14 ticks at 129.83, while Gilts are +1 at 92.47.
- Slovakia and the EU have sold bonds this morning, while books for Italy’s latest retail offering have opened. Estonia has issued a mandate for a 2034 bond tap.
- This week’s calendar includes UK public sector finance (Tues), CPI (Weds) and flash PMI (Fri) data. In the Eurozone, Friday’s flash PMIs highlight.
Figure 1: 10-year Gilt/Bund Spread (Source; Bloomberg Finance L.P)
