WWM - Analytics


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    US Market Open – February 3, 2016

    Overnight events

    • EUR/USD continues tight with bull bias-1.0904-1.0936
    • GBP/USD better bid after PMI data- 1.4385-1.4487
    • USD/JPY soggy within 119.23-120.04 range
    • DE Jan Service PMI 55.0 vs 55.4 exp, 55.4 prev
    • EZ Jan Final Service PMI 53.6 vs 53.6 exp, 53.6 prev
    • UK Jan Service 55.6 PMI vs 55.3 exp, 55.5 prev
    • EZ Dec  R.Sales 1.4%  y/y vs 1.5% exp, 1.4% prev
    • BoJ Gov Kuroda – No limits to easing steps, will do whatever it takes
    • BoJ Policy Board Dec 17-18 mins – Govt clearly pressured for  more ease
    • Japan PM Abe: to continue to work with BOJ to hit price target
    • Japan FinMin suspends 10-year JGB sales to individuals – Kyodo
    • Japan BTMU may impose fees on big company deposits – Nikkei
    • UK NIESR – Growth of 2.3% eyed in ’16 despite global upheaval
    • UK Jan BRC shop prices -1.8% y/y, Dec -2.0%, food prices up
    • AU Dec trade def A$3.535 bln, A$2.5 bln eyed, exp -5% m/m, imp -1%


    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)

    • USD/JPY 1mth 9.6 vs 8.55 and 1mth 25D r/rev 1.6 vs 1.1 Tues’ as spot suffers
    • Cross/JPY vols higher – EUR/JPY 1mth 9.1 vs 8.5, AUD/JPY 1mth 16.0 vs 15.0
    • AUD/USD 1mth vol circles the 2015 mid point at 12.0
    • EUR/USD vol slide stalls amid broader vol demand and now cheap levels
    • Cable gamma stays bid in to Thurs’ BoE QIR – O/n costs 120 pips straddle
    • USD/CNH vols and skew take another leg higher – more new record

    Chart of the day - (Source:ThompsonReuters)

    GBP/USD needs to overcome 1.4500
    GBP/USD scope is growing for possible recovery to 1.4745 – 38.2% retrace of the 1.5820 to 1.4080 (Aug/Jan) fall - as the chart remains constructive. Before strong gains can occur, however, a break and close above two important levels at 1.4491 and 1.4500 needs to happen. 1.4491 is 23.6% retrace of the 1.5820-1.4080 fall, whereas 1.4500 is where the 30-DMA resides. 14-month momentum is now issuing positive readings, adding to the upside potential. Failure to register a daily close above the 1.4491 and 1.5000 levels will put bulls in a bind . Chart:  https://tmsnrt.rs/1PgsmNq


    Economic Data(Source:Bloomberg)



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