FOREX: USD Index Set to Post Highest Weekly Close Since May
Oct-31 16:59
- The flurry of USD selling ahead of and across the WMR month-end fixing window appears to have stalled the upward momentum for the greenback on Friday, with the USD index now settling just above yesterday’s highs around 99.75 as we approach the weekend close.
- USD: Three consecutive days of gains sees the DXY ~1.2% off the week’s lows, looking set to post its highest weekly close since May amid the hawkish lean from the Fed and notable weakness for the likes of GBP and NZD.
- GBP: For GBPUSD, the breach of key support at 1.3142 is a meaningful development for the pair. A close below would strengthen current bearish conditions, and refocus attention on 1.3041, the Apr 14 low. UK fiscal developments as we approach the Nov 26 budget will be key in shaping the short-term trajectory for sterling, while next week’s Bank of England meeting should not go overlooked.
- NZD: For NZDUSD, spot trades within 40 pips of cycle lows, located at 0.5683. A move below here would turn the focus to 0.5636, the 76.4% retracement of the year’s range. New Zealand Q3 employment data is scheduled next Wednesday local time.
- JPY: The lack of hawkish signals from the BOJ was enough to boost USDJPY to the highest levels since February, potentially looking to close above 154.00. Thursday’s rally resulted in a breach of key resistance at 153.27, the Oct 10 high, and confirms a resumption of the medium-term uptrend. Sights are on 154.80 next, the Feb 12 high.
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PIPELINE: Corporate Bond Update: $2.5B Bahrain 2Pt Launched Earlier
Oct-01 16:57
- Date $MM Issuer (Priced *, Launch #)
- 10/01 $2.5B #Bahrain $1.5B +8Y Sukuk 5.875%, $1B 12Y 6.625%
- 10/01 $750M Alpha Generation $750M 8.25NC3 6.375%
- 10/01 $500M #Convatec Group 10Y +125
- 10/01 $500M Jane Street Grp 2033 tap
- 10/01 $Benchmark IFC 5Y SOFR+38
- 10/01 $Benchmark Vistra Operations 3Y +105a, 5Y +120a, 10Y +145a
OPTIONS: Flurry Of Sonia Call Spread And Condor Buying Wednesday
Oct-01 16:52
Wednesday's Europe rates/bond options flow included:
- RXX5 129/129.50cs, bought for 17 in 5k and 15 in 12k, looking at volumes close to 20k
- ERZ5 98.12/98.00ps 1x2, sold at 6.5 in 7k
- ERH6 98.4375/98.1875/98.125p ladder, bought for 7.75 in 3.5k
- ERH6 98.625/98.375/98.00p ladder, bought for 18.75 in 2.25k
- ERM6 98.25/98.37cs, bought for 2 in 5k.
- ERM6/H6 98.31/98.43cs calendar, bought the June for 1.25 in 5k
- SFIG6 96.30/96.40/96.50/96.60c condor, bought for 1.75 in 4k
- SFIH6 96.35/96.45/96.50/96.55c condor bought for 1.25 in 4k, this was also bought Tuesday for 1 in 4k
- SFIH6 96.60/96.70cs, bought for 0.75 in 8k
- SFIH6 96.30/96.40/96.50/96.60c condor, bought for 1.75 in 2k
- SFIM6 96.60/96.80cs, bought for 3.5 in 11.6k total. Desks note paper bought 9K at the same price on Tuesday
FOREX: JPY Strength Extends Amid US Shutdown, Soft ADP Jobs Data
Oct-01 16:44
- Wednesday’s session was dominated by the appreciating Japanese Yen, with several factors contributing to the extension of strength this week. First of all, ongoing concerns surrounding the US Government shutdown and uncertainty regarding upcoming data releases have weighed on USDJPY. Secondly, Tankan survey indicated solid business sentiment and earnings in September, likely to increase the odds of an October BOJ rate hike. Thirdly, weaker-than-expected US ADP employment data prompted a bump lower for US yields, providing an additional yen tailwind.
- USDJPY dipped to a low of 146.59 following the US data, extending the pullback from last week’s highs to 2.25%. Subsequently, the pair has found some support and risen back above the 147 handle as we approach the APAC crossover. Potentially assisting the bounce was comments by US speaker Johnson stating he hopes for a shutdown breakthrough today.
- The New Zealand dollar has also been an outperformer across G10, with NZDUSD notably rising back above the significant 0.5800 pivot point. Kiwi’s outperformance has helped stall the topside momentum of AUDNZD, which registered a fresh 3-year high of 1.1418 yesterday. The cross has moved back to 1.1365 today, and support is not seen until 1.1250, the 20-day EMA.
- The Canadian Dollar is among the worst performers in G10 today as USDCAD holds close to recent highs. A breach of 1.3959 would place the pair at four-month highs. Additionally, a number of CAD crosses are at notable technical levels, with CADJPY breaching an important cluster of support and AUDCAD threatening to break above trendline resistance, drawn from the 2021 highs.
- The Swiss Franc also weakened by 0.25% Wednesday ahead of September CPI data due on Thursday. Despite this, EURCHF remains in consolidation mode, respecting the well established and familiar range between 0.93-0.94.
- US jobless claims would be in focus Thursday ahead of NFP on Friday, although the release of the data remains unlikely owing to the current government shutdown.
