SECURITY: IAEA Report Adds To Risk Of US Strikes On Iran

The IFO Employment Barometer rose to 93.4 points in January, up from 91.9 points in December. “Job cuts are slowing down, but have not yet come to a standstill [...] the labor market remains under pressure, especially in industry – with no turnaround yet in sight”, IFO concludes.

• We have recently looked at a couple of individual datapoints which all pointed towards stability in the quantities side of the German labour market towards year-end.
• Individually we wouldn't have paid too much attention to any of these but collectively we drew the conclusion these data do challenge the wider narrative that the German labour market is currently softening.

• +31,500 USH6 105 puts, 1 opener - OI 3,459 coming into the session

• Yesterday’s sharp dollar slide prompted an impressive two percent slide for USDCHF, printing a fresh 11-year low of 0.7605, further narrowing the gap to the 0.7406 2015 lows (Bloomberg data). Franc outperformance was well noted by EURCHF also closing below 0.9200 today, a previously very significant support level since 2024.
• SNB President Schlegel mentioned that the CHF real exchange rate was rather stable over the last months in a January 21 sideline Davos interview. Since that interview, most updated pricing shows the Citi CHF trade-weighted, narrow real exchange index has risen by roughly 1%, hovering just below the November peak.
• Price action has stabilised today, with USDCHF extending its recovery to around 1.1% earlier in the session, while EURCHF remains below the 0.92 mark.
• JP Morgan have said that it is a little confusing as to why CHF is so strong considering we are in a pro-cyclical macro backdrop right now. Perhaps CHF is outpacing others because of liquidity, or there is more demand for safe haven currencies on a ‘sell-America’ theme, and CHF is the ‘gold’ of FX. 
• Regardless, this dollar down cycle looks set to continue, so if JPM see an opportunity to sell USDCHF on a rally thanks to potential month end dollar demand or the Fed, they will look to enter. Regarding the SNB, JPM think we need to see EURCHF getting closer to 0.91 quickly for them to get worried.