OPTIONS: GBP/USD Downside At 1.3100 Expressed Via Options - DTCC
Early FX option volume trends have been dominated by GBP/USD and EUR/GBP flows. Per DTCC on BBG this is close to 54% of total volumes so far today. For GBP/USD we have seen just over $450mn, for EUR/GBP, close to $190mn. For GBP/USD, puts with a 1.3100 strike, expiry on Nov 17 this year have gone through, while for EUR/GBP a call at 0.8875 (same strike date).
- Latest spot levels for GBP/USD are just under 1.3150. As we noted earlier, a sustained move back below 1.3080-1.3100 would see the momentum lower reinstated and focus turn back toward the 1.3000 area. On the topside moves back to 1.3175/1.3200 today could draw selling interest.
- Spot EUR/GBP was last near 0.8850, near fresh highs back to April 2023.
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MNI: CHINA SEP CPI -0.3% Y/Y VS MEDIAN -0.2%; AUG -0.4%: NBS
- CHINA SEP CPI -0.3% Y/Y VS MEDIAN -0.2%; AUG -0.4%: NBS
- CHINA SEP CPI +0.1% M/M VS +0.0% M/M AUG
- CHINA SEP FOOD PRICES -4.4% Y/Y VS -4.3% Y/Y AUG
- CHINA SEP NON-FOOD PRICES +0.7% Y/Y VS +0.5% Y/Y AUG
- CHINA SEP PPI -2.3% Y/Y VS MEDIAN -2.3%; AUG -2.9%: NBS
- CHINA SEP PPI +0.0% M/M VS +0.0% M/M AUG
MNI: CHINA PBOC CONDUCTS CNY43.5 BLN VIA 7-DAY REVERSE REPO WEDS
- CHINA PBOC CONDUCTS CNY43.5 BLN VIA 7-DAY REVERSE REPO WEDS
CNH: USD/CNY Fixing Under 7.1000, Fresh YTD Lows, CNH Rallying
The USD/CNY fix has printed under 7.1000 for the first time this year. At 7.0995 we are well under the market expectation of 7.1320. This leaves the fixing error around recent wides at -325pips. CNH has rallied post the fixing outcome and broader USD sentiment is also softer.
- Today's fixing outcome will reinforce the resilient yuan backdrop even in the face of renewed US-China tensions. This point is reinforced by the chart below, which plots the USD/CNY fixing against the BBDXY index.
- For USD/CNH, we are back under 7.1300, which isn't too far from recent lows (7.1240). Focus will be on whether we can test back under 7.1000. This may be a bridge too far in the near term, until we see greater clarity on the US-China outlook. Still, today's fixing is likely to help cap the topside around the 7.1500 region.
Fig 1: USD/CNY Fixing Versus BBDXY Index
Source: Bloomberg Finance L.P./MNI
