EURIBOR OPTIONS: Steepener Play Blocked

SFRH6/U6/H7 fly paper paid -3.5 on ~4.1K. ~6.4K lots traded at that price in total on the session.

Of note:

USDJPY 2.07bn at 153.15/153.25.

USDCAD ~1bn at 1.4240.

EURUSD 5.37bn at 1.0400/1.0450 (thu).

GBPUSD 1.01bn at 1.2550 (thu).

USDCAD 1.01bn at 1.4310 (fri).

EURUSD 3.5bn at 1.0450/1.0455 (mon).

EURUSD 2.04bn at 1.0450 (tue).

• EURUSD: 1.0375 (230mln), 1.0400 (720mln), 1.0430 (473mln), 1.0475 (326mln), 1.0500 (1.35bn).
• USDJPY: 153.15 (965mln), 153.25 (1.11bn).
• USDCAD: 1.4240 (954mln).
• AUDUSD: 0.6260 (364mln).
• NZDUSD: 0.5700 (379mln).

Small downward revision to the UK January services PMI (50.8 vs 51.2 flash, 51.1 prior). The composite reading nonetheless ticked up to 50.6 (vs 50.9 flash, 50.4 prior). Overall, the services release screens as stagflationary, with wage-driven input cost increases being passed through to output charges, and the employment outlook  remaining soft.

Key notes from the release:

• “Greater payroll costs meant that input price pressures continued to intensify at the start of 2025. The overall rate of cost inflation was the highest for nine months, which resulted in a robust and accelerated rise in average prices charged by service sector firms”.
• “While some service providers commented on the impact of global economic uncertainty and elevated interest rates, many firms also linked lower new orders to weaker business confidence in the wake of the Autumn Budget”
• “Export sales decreased for the second month running”… “Resilient demand from US clients was reportedly offset by lacklustre spending across Europe”.
• “The rate of job shedding accelerated to its fastest since January 2021. Anecdotal evidence suggested that rising payroll costs and lower margins had encouraged hiring freezes and a focus on boosting operational efficiency”
• MNI’s BOE preview is here.