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US FX Market Open – Monday, October 10, 2016: GBP steady: Watching for Brexit headlines

Posted by Marge Maresca on Oct 10, 2016 7:28:09 AM



• GBP/USD -0.15%, EUR/USD -0.3%, USD/JPY +0.35%
• David Tory Brexit Minister may address MPs later Monday
• DXY +0.2%, DAX +0.5%, Brent -0.12%, Iron +1.23%
• CH Sep Unemployment u/adj 3.2% vs 3.2% prev, 3.2% exp
• CH Aug Unemployment adj 3.3% vs 3.4% prev, 3.4% exp
• DE Aug Trade Bal. E22.2 bln Vs E19.4 bln prev, E20.0 bln exp
• NO Sept Core CPI 2.9% y/y vs 3.3% prev, 3.3% exp
• EZ Oct Sentix vs 5.6 prev, 6.3 exp
• Deutsche Bank was given special treatment in EU stress tests - FT
• Swiss Sight Depos mixed-Domestic down but total depos up
• Kuroda reiterates cb may push back f/ct date to achieve its 2% inflation target-Bbg
• BOJ's Kuroda vows to cut rates, buy more assets to fight shocks - Reuters News
• Caixin Sept Services PMI eases slightly to 52 from 52.1 in Aug
• Trump vows to jail Clinton over emails if he wins White House
• Asia shares gain, Mexican peso jumps as markets lengthen odds on Trump

Currency Summaries

• EUR/USD drifts lower mainly thanks to EUR/GBP selling
• UST/Bund spreads shift a little lower/narrower 2-3bp
• Combined a net short positions, rates moves should limit EUR/USD fall
• China's return from hols & lower CNY after SDR inclusion should support EUR
• Upwards bias bund yields since taper talk underpins EUR/crosses

• USD/JPY outlook mixed due to daily cloud
• Daily cloud spans 102.06-103.25.
• 102.61 - 38.2% Fibo 100.09-104.17 up-leg
• Range today has been 102.81-103.38 so far today
• Japanese investors buyers said be on the dip
• 1.15B worth of 102.50 NY cut expiries, 486M at 103.00-10 & 500M at 103.50

• Marginally softer CHF from the open but below Friday's 1.0956 peak
• With last week's big swings fading the cross look to a steadier range
• Scope to 1.0980-00 but slower progress as risk mkts nervously improve
• Latest sight depo data mixed: Total up and domestic down
• Sept adj jobless rate improves to 3.3% vs 3.4% Aug
• EUR/CHF looks like 1.0930-1.0960 today: Chart:

• GBP/USD is trading within strike of a large 1.2400 expiry for the NY cut
• 1.2366-1.2443 = Monday range-to-date (low early Ldn/high in Asia)
• EUR/GBP rose to 0.9039 in early Europe trade then retreated to 0.8894
JPM has reportedly upped its year-end forecast to 0.95

• USD/CAD traded a modest 23 pip range thru the European am, 1.3254-1.3277
• 1.3225-1.3288 was the Asia range. Large 1.3200 expiry Wednesday, $1.2bn strike

• AUD/USD eased to a European am low of 0.7581. Asia range: 0.7588-0.7614
• Large 0.7600 option expiry for NY cut, $1.2bn strike

• NZD/USD has fallen to an intra-day low of 0.7134 from an early Asia high of 0.7202
• Early Asia peak scaled after Trump’s weekend troubles, pre-debate
• 0.7110 (Friday’s low) & 0.7000 are NZD/USD support levels

Today’s events

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

Option Expirations(Source:ThompsonReuters)

• Tokyo, Tawain, HK and partial US holiday’s impact flows
• Ranges steady, vols mostly heavy since NFP miss
• EUR/USD vols too expensive vs realised, should weigh whilst 1.11 holds
• GBP vols settle, albeit above levels seen ahead of Fri’s spot slump
• NZD favoured over AUD vol – 1mth gets RBNZ
• 1.1bln .7600 AUD expiry today and 2bln 0.7610 Thursday.

Looking Ahead - Economic Data (GMT) - (Source:ThompsonReuters)

• 14:00  Labor Mkt Conditions Idx Sep prev change -0.7
• 14:00  Employment Trends Idx Sep prev 128.0

Looking Ahead - Events, Other Releases (GMT) - (Source:ThompsonReuters)

• n/a   U.S. Holiday - Columbus Day banks closed, markets open
• 23:40  FRB Chicago's Evans  before Australian Busi/Econ event; Sydney


Topics: US FX Market Open


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