OPTIONS: Sizeable Strikes Could Keep G10 FX Pinned into UMich Sentiment Data
Jul-18 10:35
With just housing/building permits data due ahead of the prelim UMich sentiment at 1000ET today, there are a sizeable number of option strikes worth noting for today's NY cut: E1bln at 1.1650 in EUR/USD, $521mln at Y148.50 in USD/JPY, Gbp1.3bln at 1.3395-10 in GBP/USD and A$1.2bln at $0.6480-00 in AUD/USD.
That said, much market focus may be paid to the appearance of Fed's Waller on BBG TV at 1300BST/0800ET - while spoke just yesterday, he continues to stand out along with Bowman amidst the Fed's independence being threatened by President Trump's call for 1% rates.
Full option pipeline:
- EUR/USD: $1.1566-70(E899mln), $1.1600(E2.2bln), $1.1650(E1.0bln),
$1.1700(E1.3bln), $1.1850(E1.2bln) - USD/JPY: Y148.00($597mln), Y148.25($844mln), Y148.50($521mln)
- GBP/USD: $1.3395-10(Gbp1.3bln)
- AUD/USD: $0.6455-60(A$695mln), $0.6480-00(A$1.2bln)
- NZD/USD: $0.5932-50(N$498mln)
- USD/CAD: C$1.3715-30($1.3bln)
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OPTIONS: Expiries for Jun18 NY cut 1000ET (Source DTCC)
Jun-18 10:30
- EUR/USD: $1.1500(E2.2bln), $1.1600-04(E1.0bln), $1.1645-50(E1.2bln)
- USD/JPY: Y144.00($725mln)
- NZD/USD: $0.5760(N$1.2bln)
- USD/CAD: C$1.3600($1.4bln)
- USD/CNY: Cny7.3000($858mln)
OUTLOOK: Price Signal Summary - USDJPY Outlook Trend Structure Remains Bearish
Jun-18 10:30
- In FX, the trend set-up in EURUSD remains bullish and short-term weakness is for now considered corrective. Recent gains have resulted in a breach of 1.1573, the Apr 21 high. This strengthens the bullish theme and confirms a resumption of this year's uptrend. Scope is seen for a climb towards 1.1696, a 1.618 projection of the Feb 28 - Mar 18 - 27 price swing. Initial firm support is at 1.1425, the 20-day EMA. The 50-day EMA lies at 1.1286. Short-term weakness is considered corrective.
- A sharp sell-off in GBPUSD resulted in a breach of support at the 20-day EMA, at 1.3496. The latest move down is considered corrective and key trend signals remain bullish. The next important support lies at 1.3350, the 50-day EMA. On the upside, the key resistance and bull trigger has been defined at 1.3632, the Jun 13 high. A break of this hurdle would confirm a resumption of the primary uptrend.
- USDJPY is holding on to its most recent gains. A bearish trend condition remains intact and recent gains are considered corrective. Moving average studies are in a bear-mode position highlighting a dominant downtrend. A resumption of weakness would open 142.12, the May 27 low. On the upside, key short-term resistance is 146.28, the May 29 high. First resistance is 145.46, Jun 11 high.
STIR: Fed Not Seen Cutting Until October Ahead Of Today’s FOMC w/ Dot Plot
Jun-18 10:29
- Fed Funds implied rates are 2bp lower than yesterday’s most hawkish levels for the Dec’25 FOMC meeting although still only have a next cut priced for October.
- Cumulative cuts from 4.33% effective: 0bp for today, 3.5bp Jul, 18.5bp Sep, 30bp Oct and 46bp Dec.
- The SOFR implied terminal yield of 3.265% (SFRZ6) is 1.5bp lower on the day, consolidating yesterday’s twist flattening on intensification in geopolitical tensions.
- Today’s docket is of course headlined by the FOMC decision. MNI Preview here.
- Special mention does however go to weekly jobless at 0830ET, brought a day forward owing to tomorrow’s Juneteenth holiday. Initial claims cover a payrolls reference period whilst continuing claims will be watched after their notable push higher in the latest two weeks.
