OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jan06 $1.0300(E1.4bln); Jan07 $1.0300(E2.6bln); Jan09 $1.0200(E2.8bln), $1.0250-60(E2.1bln)
- USD/JPY: Jan06 Y156.00($1.4bln); Jan08 Y157.50($1.2bln)
- EUR/GBP: Jan08 Gbp0.8300(E1.1bln)
- AUD/USD: Jan07 $0.6180-00(A$1.1bln)
- USD/CAD: Jan08 C$1.4460($1.0bln)
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EURGBP: Cross Again Sees Support in Area of Demand
With the initial leg higher provided by the post-ISM USD weakness, EUR/USD is building on gains to hit a new daily high at 1.0544, which also coincides with a firm phase of EUR/GBP strength, with the cross recovering well off the pullback low at 0.8269 to keep the price from any major downside breakout.
- We have noted across the past few weeks a clear area of demand in the cross, layered between 0.8260-87 that coincides with the range-defining support around the 0.8300 handle. Note that this equates to 1.21 in GBP/EUR - a psychological resistance level that often draws attention, and has not been meaningfully broken since 2016 and the year of the Brexit referendum.
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP4bln of the 4.25% Jul-34 Gilt (ISIN: GB00BQC82C90) at its auction next Wednesday, December 11.
FRANCE: RTRS-Macron Aims To Appoint New PM Before 7 Dec: Sources
Reuters reports that according to its sources, President Emmanuel Macron will aim to name a new prime minister swiftly if the incumbent gov't of PM Michel Barnier falls this evening. According to Reuters, one source says there is a desire to name a new PM ahead of the re-opening ceremony for the Notre Dame Cathedral in Paris, taking place on Saturday 7 December. Given that it took several months to appoint Barnier following the July election, getting a new figure in place in such a short timeframe is likely to prove difficult.
- The National Assembly is set to take up two motions of censure against the Barnier gov't shortly, once there has been a vote on the end-of-management bill for 2024 (this has been agreed and will avoid any fiscal issues until year-end). Livestream here (in French).
- It would appear that the small chance Barnier had of avoiding ouster - requiring the centre-left Socialist Party (PS) to side with the gov't - has gone. First Secretary Olivier Faure said to Le Monde that he "never refused dialogue" with the PM on passing a budget, but that his party "cannot be asked to approve a project whose injustice we denounce,".
- Several names have been mooted as potential replacements for Barnier. They include Francois Bayrou, leader of the centrist MoDem which sits as part of the pro-Macron Ensemble bloc; Sébastien Lecornu, the Minister of the Armed Forces hailing from Macron's centrist Renaissance; former Socialist Party PM Bernard Cazeneuve; and former Finance Minister Francois Baroin from the conservative Les Republicains.
