EURUSD TECHS: Reversal Signal
Jan-07 18:00
* RES 4: 1.1919 High Sep 17 and a key M/T resistance * RES 3: 1.1848 High Sep 18 * RES 2: 1.1808 Hig...
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FOREX: JPY and CHF Underperform as Core Yields Shift Higher
Dec-08 17:55
- Despite the correlation breakdown between rates and the Japanese yen in recent months, higher core yields on Monday have weighed on the low yielders, with JPY and CHF underperforming the G10 basket. A round of hawkish communique from ECB’s Schnabel provided the initial selling impetus for bonds today, extending on the theme seen last week.
- Both USDJPY and USDCHF have risen around 0.35%, assisting the USD index to further recover from last weeks pullback lows as we approach this week’s Fed decision, where market pricing leans heavily towards the FOMC cutting rates by 25bps.
- The bounce for USDJPY was also assisted by a magnitude-7.6 earthquake that struck off the northeast coast, prompting urgent evacuation warnings for coastal areas of northern Japan. These dynamics boosted USDJPY from its overnight 154.91 lows to a session high of 155.99. Last week’s deep retracement for USDJPY has allowed an overbought condition to unwind, and today’s bounce underpins the underlying bullish theme for the pair.
- The more constructive dollar backdrop prompted the likes of CAD and AUD to scale back from recent highs, although both currencies continue to exhibit short-term bullish signals as both RBA and BOC decisions are awaited over the next two sessions.
- Schnabel’s initial Euro boost was very short-lived, as EURUSD faded from1.1672 session highs and sits close to 1.1630 as we approach the NY crossover. Last week’s breach of meaningful 1.1656 resistance has failed to garner much topside momentum, as the tepid optimism surrounding Russia/Ukraine peace talks might be dissipating. Zelenskiy said negotiators discussing a US-brokered peace initiative remain divided over territory amid Trump’s disappointment, and polymarket still assigns a <50% probability of a ceasefire in 2026.
- The RBA meeting highlights Tuesday’s calendar, before US weekly ADP and September JOLTS data are scheduled. BOJ’s Ueda and RBNZ’s Breman are scheduled to speak.
FED: US TSY 3Y AUCTION: NON-COMP BIDS $176 MLN FROM $58.000 BLN TOTAL
Dec-08 17:45
- US TSY 3Y AUCTION: NON-COMP BIDS $176 MLN FROM $58.000 BLN TOTAL
US TSY OPTIONS: Large Jan'26 10Y Trades
Dec-08 17:25
- 30,000 TYF6 112.75/113.5 call spds, 9 net vs. 112-07 to -07.5 (potential roll-down w/ 113.5 call open interest at 378,066 coming into the session vs. 8,040 112.75 call OI).
- 8,000 wk2 TY/TYF6 112 put spds earlier
