FOREX: NZDUSD Surges 1.2% to Fresh 2025 Highs
Mar-17 17:36
- Firmer risk sentiment on Monday has allowed the higher beta currencies to outperform in the G10 FX space. Added to this, weaker details within the US retail sales report has bolstered the softer dollar theme, allowing AUDUSD and NZDUSD to register gains of 0.93% and 1.22% respectively,
- Topside momentum for NZD has been exacerbated by the earlier breach of the 2025 highs, which has seen NZDUSD rise back above 0.5800 for the first time since mid-December. Furthermore, the solid bounce for equities is underpinning a strong move higher for NZDJPY, likely bolstering the renewed Kiwi optimism. This is the first time the cross has been above its 50-day EMA since January, having built a solid base in the low 83.00s earlier this month.
- The broad dollar offer has also assisted GBPUSD to print a fresh four-month high as the pair edges ever closer to the psychological 1.3000 mark. A close at current levels would be the highest daily close since the US election and should keep attention firmly on the November 06 high of 1.3048.
- In similar vein, EURUSD rose as high as 1.0929 as markets await tomorrow's special session in the Bundestag. Optimism over the German debt deal have been inspiring the optimism for the single currency, and the gap has been narrowing to the recovery highs of 1.0947. This level will need to be cleared before the market turns its focus to pivot resistance at 1.10 and a more notable cluster of medium-term resistance around the 1.12 mark.
- A relatively subdued session for USDJPY still saw an 80 pip range for the pair. Post data action saw an initial dip lower to 148.31 before being swiftly faded as markets latched on to the stronger-than-expected control group reading. Overnight session highs at 149.10 have capped the upside so far, and initial resistance comes in just above at 149.46, the 20-day EMA.
- German ZEW and Canadian CPI highlight Tuesday’s calendar, before the focus turns to major central bank decisions starting Wednesday.
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US TSYS: Yields Pull Back Again With Consumer Growth Story In Question
Feb-14 21:08
Treasuries outperformed global counterparts Friday, fully completing a reversal from a midweek selloff.
- A large miss in January retail sales (-0.9% M/M vs 0.7% prior, -0.2% consensus) represented the biggest sequential drop in 22 months, with a similarly weak "control group" figure leading to a 0.5pp downgrade to the Atlanta Fed's GDP nowcast (to 2.3% GDP growth in Q1, i.e. no acceleration from Q4).
- That was enough to see the 10Y Treasury yield drop 7bp in the subsequent half hour, continuing the downtrend seen beginning in the immediate aftermath of Wednesday's hot CPI release. 10Y yields dropped over 21bp from the Wednesday high to Thursday's low, ultimately ending a tumultuous week 1.5bp lower.
- Yields ticked a little higher in afternoon trade Friday but the curve leaned bull steeper on the day, with the belly outperforming: 2-Yr yield is down 4.6bps at 4.261%, 5-Yr is down 5.7bps at 4.3328%, 10-Yr is down 5.1bps at 4.4782%, and 30-Yr is down 3.9bps at 4.6982%.
- In futures: Mar 10-Yr futures (TY) up 9/32 at 109-08 (L: 108-26 / H: 109-15.5).
- Other data (industrial production mixed, import prices soft) had little lasting impact.
- The coming week’s data schedule is relatively light, due in part to Monday’s Presidents Day holiday (SIFMA recommends bond cash close, equities closed), with initial jobless claims, February prelim PMIs, and regional Fed manufacturing surveys among the highlights. Supply includes 20Y Bond and 30Y TIPS auctions.
- We also get plenty of Fed communications including the January meeting minutes, and speaking appearances by both doves (Gov Waller) and hawks (St Louis Pres Musalem).
USDCAD TECHS: Bear Cycle Extends
Feb-14 21:00
- RES 4: 1.4948 High Mar 2003
- RES 3: 1.4814 High Apr 2003
- RES 2: 1.4503/1.4793 High Fb 4 / 3 and key resistance
- RES 1: 1.4380 High Feb 10
- PRICE: 1.4175 @ 16:54 GMT Feb 14
- SUP 1: 1.4107 50.0% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 2: 1.4011 Low Dec 5 ‘24
- SUP 3: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD broke lower Thursday, breaking out of a tight trading range this week and remains soft. A key support at 1.4261, the Jan 20 low, has been cleared and this signals scope for an extension of the current bear cycle - a correction. Scope is seen for a move towards 1.4107, a Fibonacci retracement. Initial firm resistance to watch is 1.4380, the Feb 10 high. A break would highlight an early bullish reversal signal.
OPTIONS: Mixed SOFR Rates Trade To Cap Week
Feb-14 20:47
Friday's US rates/bond options flow included:
- SFRH5 95.62p, traded half in 2k.
- SFRH5 96.93c, traded 0.25 in 4k.
- SFRH5 95.75/95.62ps 1x2, Traded 3.75 in 3k.
- SFRK5 97.00c, traded for 0.75 and 1 in 3k.
- SFRU5 95.93/95.81/95.68p fly, traded 1 in 1.5k
- SFRU5 96.50c, traded for 6.5 in 1.5k.
- SFRU5 95.87^, traded for 36 in 5k.
- SFRJ5 95.87/95.75/95.68p fly 1x3x2 with SFRK5 95.81/95.68/95.62p ladder 1x3x2, bought for 10 in 2k.
- SFRM5 95.68p, sold at 2.5 in 10k.
- 0QH5 96.00c, bought for 13 in 3k.
- TYH5 107p, bought for 11 in 15k
- TYJ5 107p, bought for 11 in 17k total.
- TYJ5 107/106ps, bought for 7 in 15k total.
