OPTIONS: Larger FX Option Pipeline
Aug-10 10:39
- EUR/USD: Aug15 $1.0800-10(E1.8bln), $1.1000(E1.1bln)
- USD/JPY: Aug11 Y141.30-35($1.1bln); Aug14 Y142.00($1.6bln)
- AUD/USD: Aug11 $0.6800(A$1.1bln)
- USD/CAD: Aug11 C$1.3325($3.3bln)
- USD/CNY: Aug11 Cny7.1000($1.1bln); Aug15 Cny7.1000($2.1bln)
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CNH: USD/CNH Manages Shallow Look Below 7.20 Before Pulling Back Above
Jul-11 10:39
MNI (London) - USD/CNH had a shallow look below CNH7.20 (the first such instance since 23 June), with a move away from worst levels for the broader USD (in BBDXY terms) helping the pair to find a base.
- Firmer than expected Chinese credit data for the month of June (foretold by comments run in state-owned media outlets), coupled with continued headwinds for the broader USD, have limited any rebounds, leaving the rate around CNH7.2050 last.
- The upper end of the well-defined uptrend channel that was in play between February and June has been breached, leaving bears looking to the Jun 22 low (CNH7.1699) as the initial area of technical support. Beyond there lies the 50-day EMA (CNH7.1270).
- A quick reminder that long USD/Yuan plays remain a preferred position for many, owing to carry and worry surrounding the Chinese economy. This brings a more than negligible positioning element into play during moves lower.
- The signalling of further Chinese stimulus has probably put peak China worry behind us, as noted a few weeks ago, although the risk on that front seems to be for under, not over, delivery. Many have pointed to the need for more meaningful fiscal stimulus at a household level, as opposed to focus on the traditional levers of Chinese policy stimulus. The July Politburo remains a likely staging ground for related announcements.
AUD: AUD/JPY Off 4% From Cycle High Amid Signs of Life in the VIX
Jul-11 10:31
- AUDJPY remains under considerable pressure, extending the current losing streak to five consecutive sessions - the longest losing streak since September last year. This puts the pullback from the June cycle high (itself a bearish harami candle pattern) at over 4%.
- The pullback is now within range of key support at the 50-dma at 93.44 - last crossed in early May and looks partially corrective - unwinding the overbought condition that set in after the early June rally. Weakness through the 50-dma exposes 93.24 retracement support initially, ahead of 91.87, the 50% retracement of the recovery off the March low.
- Over the past few years, the cross has been closely tied to risk/equity volatility and market turns (early March SVB crisis, Sept BoJ intervention) via the VIX Index, which has ticked higher from the post-COVID lows printed in late June. Further equity volatility gains could spell further weakness in AUD/JPY. This brings tomorrow's US CPI report and the late July BoJ decision into the spotlight ahead.
US 10YR FUTURE TECHS: (U3) Corrective Bounce
Jul-11 10:27
- RES 4: 113-16 50-day EMA
- RES 3: 112-17+ High Jul 3
- RES 2: 112-12+ Low Jun 14 and the 20-day EMA
- RES 1: 112-04 High Jul 5
- PRICE: 111-14+ @ 11:16 BST Jul 11
- SUP 1: 110-05 Low Jul 6
- SUP 2: 110-00 Low Nov 9 2022 (cont)
- SUP 3: 109-14 Low Nov 8 2022 (cont)
- SUP 4: 109-10+ Low Nov 4 2022 (cont)
Treasury futures remain above last week’s low of 110-05 (Jun 6). The trend outlook is bearish and short-term gains are considered corrective. The break lower last week confirmed a resumption of the downtrend. Note that moving average studies are in a bear mode position, highlighting current conditions. The focus is on the 110-00 handle next. Initial firm resistance is seen at 112-12+, the Jun 14 low.
