FOREX: GBP Rallies Post-BOE, But Momentum Dissipates
Dec-18 18:02
- In line with this week’s theme of waning appetite across G10 currency markets, pockets of intra-day momentum quickly stalled, prompting very moderate adjustments for the major pairs overall. GBP had an impressive rally following a tweak to the BOE’s guidance, however, only sits marginally firmer on the session as we approach the APAC crossover.
- GBPUSD popped from 1.3350 as the BOE signalled the MPC are approaching the neutral rate and gained further traction following the below-expectation US CI data. However, prior highs around the 1.3450 did a good job at capping the price action. Spot has subsequently fallen back to 1.3380, just above unchanged levels on Thursday.
- The front-end of the EURGBP vol curve has fallen sharply today: 1m implied is below 3.4% for the first time since 2024, which was itself a life-time low on the series going back to 1998. As a result, EURGBP front-end vols are now the lowest they've been for this time of year, ever.
- Elsewhere, higher-than-expected growth forecasts from the ECB also prompted a moderate push higher for the Euro, although optimism was dampened as an ECB sources report underscores Lagarde's ultimate message today: that "Any talk of rate increases was seen as premature". EURUSD held a 50 pip range over all of today’s event risk, perhaps paving the way for contained ranges heading into year-end.
- The Norwegian Krone remains the strongest in G10 after Norges Bank remained on hold as expected but revisions to the rate path pushed back on significant easing expectations ahead. EURNOK fell 0.6% to 11.91, erasing a solid chunk of this week’s advance.
- All the focus now turns to the BOJ, where markets expect a 25bp rate hike to 0.75%. USDJPY has kept a tight 155.29-155.97 range ahead of the decision, while short-term technical parameters appear well defined at 154-158.
- UK and Canadian retail sales are also scheduled Friday, alongside US existing home sales data.
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EURUSD TECHS: MA Studies Highlight A Dominant Downtrend
Nov-18 18:00
- RES 4: 1.1728 High Oct 17
- RES 3: 1.1694 50.0% retracement of the Sep 17 - Nov 5 bear leg
- RES 2: 1.1669 High Oct 28 and key resistance
- RES 1: 1.1656 High Nov 13
- PRICE: 1.1578 @ 16:36 GMT Nov 18
- SUP 1: 1.1530/1469 Low Nov 7 / 5 and the bear trigger
- SUP 2: 1.1425 1.500 proj of the Oct 17 - 22 - 28 price swing
- SUP 3: 1.1392 Low Aug 1 and bear trigger
- SUP 4: 1.1313 Low May 30
Resistance to watch in EURUSD remains 1.1669, the Oct 28 high. Clearance of this hurdle is required to strengthen a short-term bull theme and highlight a stronger reversal. Note that moving average studies are in a bear-mode position. This highlights a dominant downtrend and continues to suggest that gains since Nov 5 are corrective. A reversal lower would refocus attention on key support at 1.1469, the Nov 5 low.
OPTIONS: Schatz Options Pick Up, Notable Bund Downside
Nov-18 17:52
Tuesday's Europe rates/bond options flow included:
- DUF6 107.10/107.00/106.90 put ladder, paper pays 1.25 (+1) in 5k
- DUF6 107.1 call bought for 7 in 4.8k
- DUG6 107.5 call, paper pays 4 in 5k
- RXZ5 129.00c, sold at 20 in 2k
- RXG6 132.50/134.00cs, bought for 9 in 2k
- RXH6 126.5/126.0 put strip bought for 67 in 20k
- ERG6 98.00/98.12/98.25c fly, bought for 1 in 5k
- ERH6 98.12/98.25cs vs 97.9375p, bought back the put for 1.25 in 3.5k
- ERH6P 97.9375p vs ERZ6C 98.1875/98.375cs, bought the cs for 1.75 in 6k
- 0RH6 97.87/97.75/97.62/97.37broken put condor, sold at 2.5 in 4k
- SFIZ5 96.20/96.25/96.30c fly, bought for 1 in 6.5k (ref 96.245) vs selling SFIZ5 96.25/96.35/96.45/96.55c condor at 2 in 6.5k
- SFIZ5 96.25/96.30/96.35/96.40c condor, bought for 2.5 in 4.5k
- SFIF6 96.55/96.70/96.80c fly, bought for 2 in 3k
- SFIM6 96.65/96.75cs vs 96.15p, bought the cs for 0.25 in 4k
US DATA: DOL To Resume Release Jobless Claims Data On Thursday
Nov-18 17:51
- Bloomberg reports a DOL spokesman saying it will publish weekly jobless claims on Thursday, citing the overnight release at ~0310ET as a technical issue.
- Recall, earlier today we noted that the DOL had strangely reported only a single week of initial claims data (for Oct 18) and two weeks for continuing claims around then, with the 232k for initial claims somewhat above the 227k we had tracked at the time from state-level data.
- The initial jobless claims data remain at a healthy level, not yet showing any sign of the recent rise in October layoff announcements reported by both the Challenger report from two weeks ago and a more recent update from Cleveland Fed researchers looking specifically at WARN filings.
"*US WEEKLY JOBLESS CLAIMS DATA TO BE RELEASED THU., DOL SAYS
*TECHNICAL ISSUE CAUSED EARLY POSTING OF SOME CLAIMS DATA: DOL" - bbg
