US STOCKS: Through Resistance
Stocks continued to rally as Fed Chairman Powell continues to answer questions. SPX emini futures through first resistance, July 22 high of 4016.25, ESU2 currently 4021.0 high as Chair Powell says he does not see the US currently in a recession with "too many areas of the economy that are performing too well and of course, I'd point to the labor market. In particular."
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US TSYS: Eurodollar/SOFR/Tsy Option Roundup
Light summer volumes setting in, flow mixed with Eurodollar options focused on upside calls while the SOFR options (replacing Eurodollar options in June 2023) and Treasury options focused on downside puts.
- Fading the sell-off in underlying rates, Eurodollar options saw better upside call volume. Salient trade a block buy of +10,000 Jul 96.62/96.87/97.12 call flys, 3.75 over Jul 96.25/96.56 call spds. Negative rate hedging continues with paper buying 100.12 and 100.25 calls in Red Sep'23 expirys.
- SOFR option trade included modest put fly blocks in August and October expirys while Treasury option trade included put spread buying in 5s, 10s and 30s. Wk1 10Y midcurve options drew largest volume with 30,000 wk1 TY 113/114 put spds trading early.
USDJPY TECHS: Trend Condition Still Bullish
- RES 4: 139.07 Bull channel top drawn from the Mar 4 low
- RES 3: 138.56 1.618 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 2: 137.30 1.50 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 1: 136.71/88 High Jun 22 / High Oct 1998
- PRICE: 135.16 @ 16:33 BST Jun 27
- SUP 1: 134.27 Low Jun 23
- SUP 2: 133.41/131.50 20-day EMA / Low Jun 16 and key support
- SUP 3: 130.89 Bull channel base drawn from the Mar 4 low
- SUP 4: 130.00 Round number support
USDJPY remains in an uptrend. The pair broke to new cycle highs last week, which confirmed a resumption of the primary uptrend. The move higher also maintains the bullish price sequence of higher highs and higher lows and has opened 136.88 next, the Oct 1998 high. Price is also trading inside a bull channel - drawn from the Mar 4 low. The top at 139.67 is an objective further out. Key short-term support has been defined at 131.50.
CANADA: USDCAD Keeps To Narrow Range After Recent Swings
- USDCAD is keeping to a narrow range today relative to recent moves, sitting -0.07% at 1.2882.
- It saw little impact from mixed US data (beats in core durables & pending home sales, miss in Dallas Fed mfg survey) and a further decline in Canadian consumer confidence.
- CAD sits mid-pack of the majors, including high beta currencies, with largest relative outperformance on the day vs AUD & NZD.
- That tallies with CFTC positioning holding onto a recent switch to net longs as of Jun 21 (+2.9% of OI, prior to very strong Canadian CPI inflation the day after) compared to trimmed but still net shorts of -29.6% for AUD and -12.6% for NZD.
