CZK: Koruna Extends Gains
May-01 09:58
EUR/CZK changes hands -0.022 at 24.913, extending its move beyond the psychologically significant 25.0 figure. Market closure associated with the Labour Day reduces liquidity and headline flow. Technically, Mar 26 low of 24.845 remains the initial target. Conversely, bulls look for a return above 25.0 and an attack on the nearby DMAs.
- Earlier this week, CNB Governor Ales Michl told Mlada fronta Dnes that the central bank's contribution to taming inflation was 'in a strong koruna' which helped impose restrictive conditions on exporters and contain demand.
- The koruna has outperformed the assumption of the CNB's Winter Forecast, which may prompt a revision in the next forecast, which is due alongside next week's rate decision.
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TARIFFS: Trump's Liberation Day Tariffs - What to Expect?
Apr-01 09:50
- What we know: Trump, with his cabinet in attendance, will announce the details of his reciprocal tariff plan at 1500ET/2000BST tomorrow, aiming to address "unfair" trade practices with "country-based" tariffs. Sectoral duties will still be implemented, but will not be the focus Wednesday - so don't expect details on Autos, copper, pharma, or otherwise. There will be "no exemptions at this time" - meaning there appears to be little room for bilateral negotiation at this stage.
- What we don't know: Which countries will be targeted, what the outright levies will be, and when they will be effective by. It is also not clear whether tariffs will 'stack' - e.g. whether Aluminium exports to the US from a tariffed country will be double charged. It is also unknown whether goods deemed compliant under USMCA, or other trade agreements, will be exempt, or subject to an outright tariff.
- What does the market expect? There is no real consensus on what the outright tariff % could be, however it's expected that those that maintain the largest relative trade surpluses with the US will be targeted most heavily (including, but not limited to, the EU, China, Mexico, Canada, Japan, South Korea). Average levies are expected to range between 10-20%, but outsized risk remains - particularly considering Trump's recent threats to charge as much as 50% tariffs on Canadian goods in the short-lived rift over Ontario's electricity surcharges.
EURIBOR OPTIONS: Longer dated call spread
Apr-01 09:44
ERM6 98.875/99.00/99.375c ladder, bought for -1 in 2k.
EURIBOR OPTIONS: Latest notable Options
Apr-01 09:39
- ERM5 97.875/98.00cs, sold at 5.25 in 7k.
- ERZ5 98.0625/98.25cs vs 97.75/97.50ps, bought for 3.5 in 7k.
- 0RJ5/0RK5 98.00/98.12cs vs 97.5625p, bought the May for 0.25 in 10k.
