WWM - Analytics

    WWM

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    US Market Open – February 10, 2016; Fx overshadowed by stock recovery

     Overnight events

    • EUR/USD plays 1.1237-1.1310 quiet trade
    • USD/JPY 114.26-115.26-GBP/USD 1.4438-1.4532
    • DAX up 2.6%, CAC 2.25%, FTSE-100 1.25%, Brent 2.3%
    • Deutsche Bk shares up 13.6%
    • NO Jan core CPI 3.0% y/y vs 3.0% prev, 3.0% exp
    • No Jan Headline CPI 3.0% vs 3.0% prev, 2.5% exp
    • UK Dec Ind Output -0.4% y/y vs 0.9% prev, 1.0% exp
    • UK Dec Mfg Output -1.7% y/y vs -1.2% prev, -1.4% exp
    • FOMC Chair Yellen faces tough sell on Fed rate hikes in Congress
    • Negative US rates possible but no panacea for economic woes
    • Mrs Watanabe loses faith in Abenomics, turns bullish on yen
    • EconMin Ishihara – Economic fundamentals recovering
    • Europe to call on G20 finance chiefs for urgent action on growth
    • ECB/BdF de Galhau – Deflation battle not over – Le Figaro

     

    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)

    • Markets more settled and vols have peaked/eased
    • Yellen near term focus – keeps a bid under USD gamma
    • 1mth expiry gets  10 March ECB – lifted EUR/USD and EUR/GBP 1.0 vol
    • USD/JPY vols ease as spot settles, but still well above last week’s lows
    • Sub 114 to reignite USD/JPY vol demand. Risk reversals still high JPY calls

     

    EUR/CHF risk further downward moves  

     

    EUR/CHF continues the spiral lower from 2016 peak at 1.1200, downside targets include 1.0914 and 1.0846 – 61.8% and 76.4% retrace of the 1.0738-1.1200 (Nov/Feb) rise. Risk is growing for a daily close below the 30-DMA which is currently at 1.0972 which will weaken the structure further for the 30-day lower bolli-band now at 1.0782. Daily momentum is positive throughout 2016, but is at risk of registering negative readings in the days ahead. Decent resistance comes in at Tuesday’s 1.1050 high, only a daily close above this level will shift the bias back to the upside. Chart: https://tmsnrt.rs/1KEXRUY

    Economic Data(Source:Bloomberg)

    Feb10data.png


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