FOREX: Moderate USD Boost Friday, DXY Broadly Consolidates Weekly Decline
Dec-12 16:34
- Having held resistance well across November, the USD’s turn lower gathered downside momentum this week, assisted by a not so hawkish cut from the Fed. This prompted the USD index to briefly extend its three-week pullback to ~2.25% on Thursday, before a partial reprieve across Friday’s session.
- Despite a sharp move lower for major equity indices late Friday, impact on the DXY has been moderate, and is currently registering a 0.55% decline on the week. The late selloff has weighed on the likes of AUD (-0.39%) and NZD (-0.28%), while GBP has suffered following the weaker-than-expected October GDP, bolstering the likelihood of a BOE cut next week.
- The worst performing currencies are both the NOK and SEK today, with limited newsflow to explain the moves. Some may point to a potentially delayed reaction to waning oil prices across the week as contributing to the 0.75% move higher for EURNOK, which has risen to the highest level since late August.
- USDCAD weakness has been one of the most notable developments in G10 FX over the last week, with spot extending lower following an impressive technical breakdown. Friday’s Canadian dollar relative resilience emphasises this narrative and downside targets for USDCAD include 1.3682, the 76.4% retracement of the Jun 16 - Nov 6 bull cycle and 1.3637, the Jul 25 low.
- Tier-one data from the US returns next week, with employment and inflation data headlining. Rate decisions from the BOE, ECB, BOJ, Riksbank and Norges are all scheduled.
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FED: US TSY 17W BILL AUCTION: HIGH 3.750%(ALLOT 95.87%)
Nov-12 16:32
- US TSY 17W BILL AUCTION: HIGH 3.750%(ALLOT 95.87%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 29.23% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 6.51% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 64.27% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 3.18
EURIBOR OPTIONS: Broken Put Mid-curve Condor
Nov-12 16:31
0RF6 98.125/98.0625/98.00/97.875 broken put condor. Paper sold for 0.5 in 10.5k
FOREX: Price Action Consistent with GBP Demand, USD Sales into 4pm London
Nov-12 16:18
USD reversal holds in recent trade, helping form a notable intraday reversal in the likes of EURUSD, USDCNH and - in particular - GBPUSD.
- Price action is consistent with some GBP buying and USD sales into the 4pm WMR fix, and while the rally in GBPUSD does put the pair close to 50 pips off intraday lows, the rally is still well short of AM highs into 1.3155 and yesterday's 1.3184.
- Futures volumes are consistent with a pick-up in interest for GBP as the spot rate recovered off lows - and the tail-off of activity as the rate stalls into 1.3140 further supports the view that the move was flow-related.
- We noted earlier today that dips in EURGBP remain well supported around the prior breakout level at 0.8769, highlighting the dominant uptrend. The next topside target remains at 0.8875, the April 2023 high.
