EURIBOR OPTIONS: EURIBOR FIX - 06/02/25

• Decent 30-year gilt auction with a 0.3bp tail and lowest accepted price (LAP) above the pre-auction mid-price.
• Result is broadly in line with the Oct and Dec auctions for the same gilt.
• The 4.375% Jul-54 gilt price has moved to exceed that of the average accepted price (AAP) but there was a bit of a concession seen in the 5 minutes ahead of the bidding deadline so we have merely retraced that.
• No notable impact in gilt futures.

Herbert Kickl, leader of the right-wing populist Freedom Party of Austria (FPÖ) will hold a press conference at 1500CET (0900ET, 1400GMT) to deliver his first public comments since being tasked by President Alexander van der Bellen with forming a new governing coalition. The slogan for the address will be "Governing Austria honestly.". Kickl met with van der Bellen on 6 Jan and was instructed to seek agreement with the conservative Austrian People's Party (ÖVP) and its new chairman Christian Stocker. 

• This comes after talks between the ÖVP, centre-left Social Democrats (SPÖ) and liberal NEOS broke down last week. Subsequently, the ÖVP and SPÖ were also unable to reach an agreement, leaving a right-wing coalition between the FPÖ and ÖVP the only option to form a majority administration.
• Nehammer is expected to resign as chancellor by Friday 10 Jan to be replaced by an as-yet-unidentified interim head of gov't. This individual will lead the same caretaker ÖVP-Green administration that is currently in place.
• While the FPÖ has sat in gov't before, it has always been as the junior partner. If a coalition is formed, the party's elevation to the senior governing role will garner significant attention across the EU due to potential impacts on issues such as EU policy towards Russia/Ukraine (where unanimity is often required), and migration, where the party supports 'pushbacks' at the border (risking deteriorating relations with neighbours) and a rejection of the EU Pact on Migration and Asylum. 

• Despite yesterday’s rejection of the WaPo Tariff article by President-Elect Trump, the greenback is under pressure once again Tuesday, with markets taking a more cautious view of the underlying bullish dollar trend.
• While some analysts believe there may be some truth behind the details of the tariff article, others believe the resignation of Fed's Michael Barr may also be contributing to the softer greenback, assisted by the initial rally for the US KBW regional banks index in anticipation of less stringent regulations on banks' balance sheets.
• This risk on sentiment has been present in currency markets early Tuesday, with the likes of NZD and AUD outperforming. NZDUSD has now extended the bounce from multi year lows to around 1.75%, and hovers just below the 0.5700 handle. In similar vein EURUSD is back above 1.04, with German inflation data on Monday continuing to underpin a more hawkish short-term reaction for the single currency.
• USDJPY traded multi month highs of 158.42 overnight, however the pair now trades around 80 pips off this level as intervention rhetoric returns. Comments from the Japanese Finance Minister around excessive FX moves and being prepared to act have halted the yen’s decline, although the remarks don't appear to represent an escalation on what has been said recently by officials.
• The Swiss franc is a touch softer on the session following a lower-than-expected core inflation print, with EURCHF trading around 0.9430, close to 2-month highs for the cross.
• US November trade, JOLTS job openings, December services ISM highlight the economic calendar. FOMC Member Barkin is due to speak at the Raleigh Chamber of Commerce.