FOREX: USDJPY Pierces Above Key Resistance, GBP Outperforms
Mar-27 18:19
- Today marked value-date month- and quarter end in FX markets, and despite the signals pointing to US corporate demand for dollars, the USD index sits weaker on the session, declining 0.25% on the session as we approach the APAC crossover.
- GBP has outperformed on Thursday relative to the rest of G10, with the stability off lows for GBPUSD overnight largely responsible. Markets continue to digest the relatively smooth reception of yesterday's Spring Statement.
- Despite the moderate declines for US stock indices, the JPY is weaker, and USDJPY has pierced above a key cluster of resistance around 150.95, trading to a three-week high of 151.15.
- This has allowed GBPJPY to extend its intra-day rally to ~0.85%, comfortably extending above the 195.00 across the session. We noted yesterday Tuesday that on a shorter-term basis, 20-and 50-day moving averages have proven supportive for the cross, culminating in a test of medium-term pivot resistance at the 195.00 mark. On the topside, 198.95 would be a notable target for the move.
- In similar vein, AUDJPY is also breaking above its 50-day EMA, which intersected ~95.20. Importantly, we have not closed above this average since January. Above here, the February highs at 97.33 would be a notable target for a more protracted recovery.
- The single currency also trades well, shrugging off the latest auto-tariff developments, with EURUSD hovering just below 1.08 after recording a fresh pullback low of 1.0735 overnight. Faring less well has been the Mexican peso, depreciating over 1% against the greenback, as President Sheinbaum said her administration is working on a thorough response to auto tariffs. USDMXN trades at 20.33 ahead of what should be a well telegraphed 50bp cut from Banxico late Thursday.
- Eurozone inflation data kicks off Friday, with readings from France and Spain. UK retail sales and activity data is also scheduled before the focus turns to the US PCE report.
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Historical bullets
STIR: BLOCK: Large Downside Skew Play via
Feb-25 18:17
- Skew play blocked at 1258:27ET:
- +38,000 TYK5 108.5 puts, 21 vs.
- -15,000 TYK5 112 calls, 34 and
- -10,000 TYJ5 112 calls 15 vs
- 24,000 TYH5 110-16
- Meanwhile, a large May 10Y risk reversal traded on screen shortly after:
- -30,000 TYK5 109/111 put over combos at 13 vs. 110-07/0.71%
US TSYS/SUPPLY: Review 5Y Auction - Forth Consecutive Stop
Feb-25 18:07
- Tsy futures remain well bid (TYH5 trades 110-16 last, +20) after $70B 5Y note auction (91282CMQ1) stops 0.9bp through (fourth consecutive stop since June): drawing 4.123% high yield vs. 4.134% WI; 2.42x bid-to-cover vs. 2.40x prior.
- Peripheral stats show indirect take-up rising to 73.87% vs. 62.79% prior, directs recede to 14.54% vs. 26.09% prior (highest since Jul 2014), primary dealer take-up 10.59% vs. 11.12% prior.
- The next 5Y auction is tentatively scheduled for March 26.
FED: US TSY 5Y NOTE AUCTION: HIGH YLD 4.123%; ALLOTMENT 26.18%
Feb-25 18:03
- US TSY 5Y NOTE AUCTION: HIGH YLD 4.123%; ALLOTMENT 26.18%
- US TSY 5Y NOTE AUCTION: DEALERS TAKE 10.59% OF COMPETITIVES
- US TSY 5Y NOTE AUCTION: DIRECTS TAKE 14.54% OF COMPETITIVES
- US TSY 5Y NOTE AUCTION: INDIRECTS TAKE 74.87% OF COMPETITIVES
- US TSY 5Y AUCTION: BID/CVR 2.42
