WWM - Analytics


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    US Market Open – February 2, 2016

     Overnight events:

    • EUR/USD bid but holds familiar range. 1.0883/1.0920 today
    • GBP/USD gives back Mon's gain. 1.4436 to 1.4389 but regains 1.44 ahead of NY
    • USD/JPY drops to 120.35 o/n but lifts to 120.80 in Europe
    • Brent down almost 4% on day to $32.79/barrel. $36.25 was Monday's peak
    • Fitch: Russia maintains oil price response, at a cost to growth
    • Russian ForMin: Open to further cooperation to hold meeting on oil if everyone wants
    • EZ Dec Producer Prices -0.8% m/m, -3.0% y/y vs prev -0.2%/-3.2%. -0.6%/-2.8% exp
    • EZ Jan Unemployment Rate 10.4% vs prev 10.5%. 10.5% exp
    • GB Jan Markit/CIPS Cons PMI 55.0 vs prev 57.8. 57.5 exp
    • CH Dec Retail Sales -1.6% y/y vs prev -1.7% rvsd
    • SNB Jordan: CHF remains overvalued, 7-8% against the euro

    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)

    • EUR/USD short date vols heavy as long gamma weighs. 1wk 9.0, 1mth 8.55
    • USD/JPY vol and r/rev losses stall – 1mth 2016 low 8.55 to 8.7 (10.5 pre BoJ)
    • GBP short dates at pre UK election highs – 1wk 11.5, 1mth 9.5 in to BoE/QIR
    • AUD/USD vol setbacks limited post RBA , weaker spot to underpin
    • USD/CNH – Ongoing demand for vols and CNH puts, especially back end
    • EUR/CHF front end vols underpinned as spot makes another push higher

    CHART OF THE DAY - (Source:ThompsonReuters)
    EUR/USD bull triggers on the horizon
    EUR/USD is closing in on a potential breakout point for the bulls at 1.0955/65. Spot has been trapped in a broad sideways range since mid December with the daily cloud containing a lot of the price action. The cloud top is at 1.0955 and the 100-DMA at 1.0965 reinforces resistance in this region. The technical weekly picture is becoming interesting as well. Last week the price was capped circa 1.0950 by a trend line drawn from May 2014. The line provided good resistance in Aug and then Oct last year. The latter also rejected the price's attempt back inside the weekly cloud. On that note the weekly cloud base is at 1.1039 and a possible stall point should the 1.0955/65 region yield. Given that EUR/USD has not traded above that cloud since July 2014, the base of the cloud would provide a good selling opportunity.   Chart: https://reut.rs/1WZsE0w

    Economic Data(Source:Bloomberg)


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