EURIBOR OPTIONS: Large Call Spread

Correction: Date in final sentence. Marine Tondelier, leader of the environmentalist Ecologists, has added her voice to the wave of criticism from the left towards PM Francois Bayrou regarding his comments on immigration from 27 Jan. In an interview with LCI on Monday, Bayrou said “Contributions from foreigners are a positive for a people, so long as they remain proportionate. But as soon as you get the feeling of flooding, of no longer recognizing your own country, its lifestyle and its culture, the feeling of rejection appears.”. 

• Philippe Brun, a deputy from the centre-left Socialist Party (PS) said on Sud Radio earlier that the PS "suspended our negotiations [on the budget] because the words from the Prime Minister were not dignified," adding that he hopes talks will resume. Tondelier has raise the prospect of bringing a censure motion against the Bayrou gov't over the comments, saying "I don't need him to say something stupid on LCI about immigration to decide to vote for censure,".
• The furore comes at an inopportune time with regards to the budget. The Joint Committee on the Budget meets tomorrow (Thurs 30 Jan) from 0930CET. The Committee includes senators and deputies, and will seek agreement between the two chambers on a common text. In the event an agreement is reached, the conclusions will be presented to the Assembly then the Senate on Monday 3 Feb. If an agreement is not forthcoming and Bayrou is forced to use Article 49.3 of the constitution to force a budget through without a vote, the presentation will take place Thursday 6 Feb. 

Monday’s move lower in WTI futures marks an extension of the current corrective cycle. The 20-day EMA has been breached and attention turns to support around the 50-day EMA, at $72.22. A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a reversal higher would focus attention on $79.48, the Apr 12 ‘24 high and a key resistance. Gold is trading closer to its recent highs. A bull cycle is in play and the recent breach of resistance at $2726.2, the Dec 12 high, reinforces current conditions. Sights are on $2790.1, the Oct 31 all-time high. A break of this hurdle would confirm a resumption of the primary uptrend. On the downside, the first key support to watch is $2675.2, the 50-day EMA. A reversal lower and a breach of this average would reinstate a bearish threat.

• WTI Crude down $0.71 or -0.96% at $73.11
• Natural Gas down $0.13 or -3.8% at $3.339
• Gold spot down $0.53 or -0.02% at $2764
• Copper down $2 or -0.47% at $422.85
• Silver up $0.02 or +0.07% at $30.4769
• Platinum down $0.29 or -0.03% at $945.77