US: Greenback Gains, Equities Slip on Trump Reciprocal Tariff Post
Trump posts: "THREE GREAT WEEKS, PERHAPS THE BEST EVER, BUT TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!! MAKE AMERICA GREAT AGAIN!!!"
Greenback tipped higher on the back of Trump's reciprocal tariffs post on Truth Social - another suggestion and hint that reciprocal tariffs are forthcoming after being heavily speculated last week. This isn't too far outside of expectations, but is the latest concrete sign that we could see a further escalation in trade tensions.
- This raises focus on Trump's schedule for today: He is set to sign executive orders from 1800GMT/1300ET before meeting with India's PM Modi - of particular relevance as India are one of the nations that could suffer most sharply from a reciprocal tariff arrangement.
- EUR/USD briefly back below $1.0400 on the post, with equity futures also dipping slightly. Yields far more resilient.
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US TSY FUTURES: Short Setting In WN Dominated On Monday
OI points to a mix of net short setting (TU, UXY, US & WN) and long cover (FV & TY) during yesterday’s move lower in Tsy futures.
- Net short setting in WN futures accounted for all of the net DV01 equivalent positioning movement on the curve, as the net swings in the remaining contracts offset.
| 13-Jan-25 | 10-Jan-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,309,879 | 4,296,021 | +13,858 | +529,282 |
FV | 6,134,293 | 6,154,065 | -19,772 | -819,298 |
TY | 4,660,490 | 4,677,693 | -17,203 | -1,090,129 |
UXY | 2,225,372 | 2,220,460 | +4,912 | +421,706 |
US | 1,937,239 | 1,929,471 | +7,768 | +941,969 |
WN | 1,796,756 | 1,782,817 | +13,939 | +2,526,574 |
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| Total | +3,502 | +2,510,105 |
OUTLOOK: Price Signal Summary - Bull Cycle In Oil Remains In Play
- On the commodity front, recent gains in Gold appear corrective - for now. However, the yellow metal is holding on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2642.9, the 50-day EMA.
- In the oil space, the trend structure in WTI futures remains bullish and the contract traded higher again, Monday. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $72.69. This average is seen as a key short-term support.
EURIBOR OPTIONS: Call spread vs Put
SFIZ5 96.35/97.00cs x3 vs 95.60p x1, bought the cs for -2 (receive) in 4.4k.
