FOREX: FX OPTION EXPIRY - Large AUD on Friday

ERM6 98.0625/98.1875/98.625/98.75c condor vs 97.75p, bought the condor for 1.5 in 2k.

Citi maintain their receive July ECB-dated OIS recommendation based on tail risks surrounding U.S. tariffs.

• They also note that “ECB pricing for September looks light given benign HICP last week and euro strength “.

• Tariffs are the main focus for the EUR short-end this week, with progress on an EU-US agreement seemingly still limited. The President has announced that “tariff letters , and/or deals with various countries” will be delivered from 1200EST today (1700 BST).
• On Friday, EU Commission Sefcovic was threatened with 17% tariffs on EU agricultural exports, and according to the FT, EC President Von der Leyen has reached out to European leaders over the weekend to get guidance on whether she should accept a deal with some higher tariffs, which many favour, or raise the pressure on the US. The FT suggests the bloc is still divided on the best strategy.
• Euribor futures have been dragged lower by the latest weakness in core EGBS (see above). The strip is bear steeper, with futures flat to -2.5 ticks at typing.
• Last week, ECB-dated OIS starting pricing some chance of a terminal deposit rate as low as 1.50%, but expectations remain centred on one more 25bp cut September or December.
• This morning, Centeno provided similar comments to Econostream as he did to the MNI Policy Team last week. Nagel did not speak on monetary policy in his 0900BST speech. Last Friday, he said that there was no need to rush to another rate cut, even if inflation temporarily falls below 2%. The hawkish Holzmann speaks at 1400BST.
• The July Sentix survey is due at 0930BST, with May retail sales due at 1000BST.