CZK: Koruna Sticks Close To Neutral Levels, ANO Rules Out Any Talks On 'Czexit'
Aug-15 08:58
EUR/CZK trades +0.004 at 24.501, oscillating around neutral levels. A familiar technical picture remains in play, with bulls setting their sights on the 50-DMA at 24.652. Bears eye Nov 29, 2023 low of 24.203 for initial support. Tonight's Trump-Putin talks may provide the next driver of CE3 FX price action due to the region's exposure to the war in Ukraine.
- ANO's Karel Havlíček told Hospodářské noviny that holding or debating a referendum on leaving the EU and/or NATO is a red line for his party ahead of future coalition talks. ANO is projected to win the upcoming election by a comfortable margin but may be unable to govern alone and some of the parties that could help prop up its potential government are pushing for an exit from the European Union and NATO.
- The minutes of the CNB's most recent monetary policy meeting showed that a couple of policymakers called for a flexible monetary policy stance, seeing much uncertainty ahead. Another couple of members pointed to the increase in corporate bond issuance, which they saw as evidence of a reduced restrictiveness of monetary policy.
- CZGB yields are mixed across the curve; the PX Index has added 0.5%, moving further above the 2,300 mark.
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FOREX: Greenback Consolidating Tuesday Advance, GBP Contained Post CPI
Jul-16 08:57
- G10 currency ranges have been very contained early Wednesday, allowing the US dollar to consolidate the prior day’s broad-based advance following the release of US inflation figures. The recent USD index recovery has now extended to around 2.3% from cycle lows printed on July 01. The rally marks the cleanest evidence yet of a material break of the downtrend posted off the February high, bolstered by a clean break above the 20-day EMA.
- USDJPY moderately extended its significant upswing overnight, printing at the highest level since April 03 at 149.18. Bullish momentum was underpinned by the rising US yields and breaks above the June and May highs likely exacerbated the move. The May high around 148.65 has provided support this morning, keeping a short-term bullish theme prominent.
- the next focus will be on 149.38, the 50.0% retracement of the Jan 10 - Apr 22 bear leg, and 150.49, the Apr 2 high.
- Despite headline and core CPI in the UK surprising to the upside, we think the BOE will largely describe inflation in the August MPR as broadly in line with their forecast. This explains the very limited reaction for GBP this morning, as markets assess the upcoming labour market data on Thursday and bearish technical developments for the pound.
- GBPUSD breached important trendline support below 1.3430 yesterday, drawn from the Jan 13 low. A clear break of the trendline strengthens a bearish threat and exposes 1.3335, the May 20 low.
- The data focus later today will be on US PPI, industrial production and the Fed’s beige book. There are also various FOMC speakers expected.
BONDS: Bonds Off Lows As Technical Supports Hold & Oil Softens
Jul-16 08:52
A downtick in crude oil helps stabilise wider core global FI.
- Technicals also play a part, with gilt futures respecting their early June low (91.16), while TY futures fail to break through Tuesday/overnight lows.
- Benchmark futures trade away from lows on the follow.
EGB OPTIONS: Bund Put Structure Trades
Jul-16 08:46
RXQ5 129 puts at 32 vs. RXV5 127 puts at 74.5-76.5 10K trades, selling the Q to buy the V, potentially rolling an existing position down and out.
