FOREX: USD/JPY Edges Closer to Key Resistance
Dec-06 10:17
- USD/JPY trades higher early Friday, benefiting from both the uptick in the US 10y yield as well as strength in European (and particularly French) equity markets. France's CAC-40 has now rallied over 4% off the November low, and is helping underpin sentiment across the continent. This brings spot within range of yesterday's 150.78 high, above which 151.25/94 marks the key upside levels - today's 50- and 20-day EMA values. Overnight JPY vols added a 7 point premium ahead of today's NFP print, with yesterday's 20.7 print in overnight implied the highest since US election day.
- AUD, NZD underperform, with NZD clearly leading the losses - there was an element of concern that the appointment of David Perdue by Trump as the Ambassador to China is a strong signal of hawkish intent toward China under the Trump admin next year - which is certainly negative for both AUD and NZD, but flow-driven moves and idiosyncratic price action is also at play.
- Perhaps notably, EUR/AUD and EUR/NZD are rallying sharply - both of which have rallied well across the French political fallout and may be triggering broader participation in AUD, NZD sales.
- The USD is firmer, rising against most others in G10, albeit within broader ranges.
- Jobs data set for Friday provides the near-term volatility risk, with markets expecting job gains of 220k over the month of November, and a step lower in average hourly earnings. The whisper number has improved across the week and now matches consensus, after being closer to 150k at the beginning of the month. Prelim UMich sentiment data is set to follow.
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EURIBOR: EURIBOR FIX - 06/11/24
Nov-06 10:09
EURIBOR FIX -EMMI/Bloomberg.
- EUR001W 3.1450 0.0030
- EUR001M 3.1020 0.0100
- EUR003M 3.0490 -0.0080
- EUR006M 2.9160 -0.0070
- EUR012M 2.6420 0.0120
EQUITIES: EU Bank Index sees selling momentum
Nov-06 10:06
- While US Banks are performing well, the European Bank index is now seeing some hard selling in SX7E after it printed its highest level since August 2015 Overnight.
- Small initial support moves up to 147.08.
(Chart source: MNI/Bloomberg):
STIR: Euribor-Implied Terminal Back Below 2%
Nov-06 10:05
The Euribor implied terminal rate has fallen back below 2% in the wake of the US Presidential Election result. The threat of increased US tariffs may limit the role of exports in aiding the Eurozone economic recovery, necessitating a deeper easing cycle in 2025.
- The U5 and Z5 futures are each 13.0 ticks higher today, while the Z4/U5 spread has fallen 9.5 ticks to -82.5.
- U5/U6 breached resistance at 13.0 ticks overnight (December 2023 high), reaching a high of 18.5 ticks. The spread has since eased back to 14.5 ticks at typing.
Figure 1: Euribor U5/U6 Spread
