ITALY T-BILL AUCTION PREVIEW: On offer next week

• Foreign exchange markets continue to take a back seat to the latest surge in energy prices and substantial pressure on core rates. With that said, as Brent future make a brief attempt above $80/bbl (extending the recovery to over 14%), USDJPY is edging closer to cycle highs of 162.84. A clear break of this hurdle would confirm a resumption of the uptrend and open 163.84, the top of a bull channel drawn from the Feb 12 low.
• Elsewhere, there are pockets of the emerging market FX complex that are seeing some pressure. Notably, the Hungarian Forint extends significantly lower given its higher beta to swings in global energy prices and post-election positioning dynamics potentially exacerbating the move.
• EURHUF has broken through both the June 8 high (357.40) – resistance that capped rallies several times over the past month – and the 50-day EMA (357.95), with the latter giving way for the first time since before the election. Importantly, the break above 357.40 disrupts the post-election sequence of lower highs and lower lows, bringing the May high at 363.13 into focus.
• Separately, the likes of MXN and ZAR are also being negatively impacted, and a break of 17.6764 for USDMXN (+0.72%) would place the pair at fresh 3-month highs.

CNN: The US is facing a “very dynamic environment” and mulling its next moves against Iran after a fresh round of strikes put the two sides’ interim agreement on the point of collapse, a US official with knowledge of the ongoing military deliberations told CNN.

• Iran continues to harass ships in the SoH by threatening attacks over their radios, but has not launched more attacks today on the vessels, the official added.
• The recent flare in tensions changed operational plans for the USS Abraham Lincoln, one of two aircraft carriers in the region. It left port a day early so it could be in position out at sea to carry out defensive and offensive missions if needed. The source said at the very least it will be carrying out defensive missions from its aircraft in the coming hours.

• US TSY 17W BILL AUCTION: HIGH 3.790%(ALLOT 80.43%)
• US TSY 17W BILL AUCTION: DEALERS TAKE 25.90% OF COMPETITIVES
• US TSY 17W BILL AUCTION: DIRECTS TAKE 4.49% OF COMPETITIVES
• US TSY 17W BILL AUCTION: INDIRECTS TAKE 69.61% OF COMPETITIVES
• US TSY 17W BILL AUCTION: BID/CVR 3.41