US: FED Reverse Repo Operation

• +10,000 SFRJ5 95.75 puts 2.0 ref 95.89
• +5,000 SFRU5 97.00/97.50 call spds, 2.0 vs. 95.99/0.06%
• +10,000 0QU5 96.50/97.00 call spd vs 3QU5 96.37/96.87 call spd spd, 0.5 net
• +5,000 SFRZ5 95.50 puts, 9.5 vs. 96.06/0.24%
• -5,000 SFRZ5 95.37/96.62 strangle, 23.0 96.07
• -10,000 SFRJ5 95.87/96.12/96.37 call flys, 4.0-3.75 ref 95.89
• -15,000 0QK5 95.25/95.50 put spds, 2.5 ref 96.09
• +5,000 SFRJ5 95.75 puts 2 ref 95.885

• Today’s data for the central government cash balance saw a budget deficit of E156.3bn in 2024 or 5.4% GDP, an improvement from the E173.3bn or 6.1% GDP in 2023 on the same cash and central government basis.
• Whilst it’s not directly compatible to national accounts basis figures used in the budget, it points to a greater directional improvement compared to the 5.4% GDP forecast for the central and state government deficit in 2024 in the October draft budgetary plan after the realized 5.6% GDP in 2023.
• This was part of the draft plan that saw a general government (i.e. incl local governments and social security) deficit of 6.1% GDP in 2024 after 5.5% GDP in 2023.
• This draft budgetary plan had pencilled in a general government deficit of 5.0% GDP in 2025 although this has since of course been lifted to a target of 5.4% GDP by the new Bayrou government having been forced through parliament without a vote on Monday. [See our political risk team’s post at 1653GMT on the fallout from this approach: Gov't To Survive 5 Feb Votes; Censure Motion Next Week Greater Threat].

• Back to the details in today’s central government cash data, the bulk of the improvement on the year came from total expenditure falling to E511.1bln vs E522.7bln in 2023.
• Total revenues also modestly increased to E357.2bn in 2024 vs E354.5bn in 2023, helped by “other tax revenues” at E67.5bn vs E65.5bn in 2023.
• The press release notes the increase in other tax revenues was "mainly due to the growth in other domestic taxes [+E2.0bln] and the solidarity levy [+E0.8bln]" though these were partially offset by a "slight decrease in net IR revenues [-E0.6bln] and the state share of net TICPE (internal consumption tax on energy products) [-E0.8bln]".
• Non-tax revenues fell to E23.2bn vs E25.1bn in 2023, mainly because of an EU RRF payment.
• Finally, special accounts recorded a deficit of E2.35bn vs the E5.1bn in 2023. 

• RES 4: 1.0533 High Jan 27 and a key resistance   
• RES 3: 1.0446 50-day EMA
• RES 2: 1.0387 20-day EMA 
• RES 1: 1.0386 High Feb 3
• PRICE: 1.0379 @ 16:36 GMT Feb 4 
• SUP 1: 1.0221 61.8% retracement of the Jan 3 low-high range
• SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
• SUP 3: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing 
• SUP 4: 0.9947 76.4% of the Sep 28 ‘22 - Jul 18’23 bull leg 

EURUSD recovered further from the Monday low, however, for now, gains are considered corrective as the 20-day EMA capped the recovery. Monday’s fresh cycle low, highlights a resumption of the downtrend. Moving average studies are in a bear-mode position and attention is on 1.0138, the 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing. Clearance of this level would open 1.0031, the 2.00 projection.