FOREX: Major Pairs Hold Relatively Tight Ranges Despite Equities Surge
Apr-24 16:18
- Currency markets remained relatively stable on Thursday, as major pairs held narrow ranges throughout the US session. The initial 0.5% dip for the USD index was trimmed as major equity benchmarks rallied well, although the DXY remains 0.3% lower as we approach the APAC crossover. Analysts remain open to the idea that the greenback weakening trend could have room to extend. More information here: https://mni.marketnews.com/3YJuB96
- The more constructive tone for risk sentiment may have been driven by headlines regarding the White House "nearing an agreement in principle on trade with India". This has boosted the likes of AUD and NZD to outperform. Given the surrounding sentiment around the broader dollar, AUDUSD may have a lot of room to appreciate, particularly in the context of AUDUSD remaining 4.5% below the US election related highs, at 0.6688. The significance of 0.6400 as a pivot point on the chart leaves the pair at an important juncture.
- USDCHF highs of 0.8311 overnight fell around 20 pips shy of the prior breakdown point at 0.8333, the 2023 low. With bearish conditions prevailing, spot has reverted back towards 0.8270. We noted yesterday that Danske have updated their 12-month forecast for USDCHF to 0.7500.
- In emerging markets, ZAR (-1%) weakness stands out despite the firmer risk tone. USDZAR is through resistance at the 20-day EMA, and the next level to watch is 19.1531, the Apr 14 high. Implications of the ZAR75bln hole left in the 2025 Budget is clearly in focus for markets.
- Tokyo CPI is due during APAC on Friday, and will be followed by UK and Canadian retail sales data later in the session. Notably, SNB President Schlegel is due to speak at the central bank’s AGM – likely to acknowledge the recent firming of the Swiss Franc, but to not provide a view on nominal CHF valuations.
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OPTIONS: Larger FX Option Pipeline
Mar-25 16:16
- EUR/USD: Mar27 $1.0750(E1.3bln), $1.0800(E1.9bln), $1.0820-25(E1.3bln), $1.0850-65(E1.9bln); Mar28 $1.0700(E1.1bln), $1.0800(E2.2bln)
- USD/JPY: Mar28 Y151.00($1.2bln)
- EUR/GBP: Mar31 Gbp0.8360-70(E1.1bln)
- USD/CAD: Mar28 C$1.4145-50($1.2bln)
EURIBOR OPTIONS: Call Spread Unwind
Mar-25 16:12
ERM5 97.875 / 98.00 call spread, sold for 4 in 10k. Market contact suggests this is an unwind of an existing position.
GBP: GBPCAD: Tariff Risks Boost Cross to Near Nine-Year Highs
Mar-25 16:11
- Tariff-related pessimism and domestic political uncertainty have left the Canadian dollar at the bottom of the G10 pile in 2025. GBPCAD remains 6% above the January lows, and the March high at 1.8779 represented a near nine-year high for the cross.
- In similar vein to GBPAUD, moving average indicators remain in a bull-mode position, and the latest pullback has allowed the 20-day EMA to provide solid support so far. The average currently intersects at 1.8453.
Source for all charts: MNI/Bloomberg
(Green lines represent 20- and 50-day exponential moving averages)
