EURUSD: Topside Momentum Stalls Amid Heightened Global Uncertainty (1/2)
Mar-21 15:16
- EURUSD continues to trade below its recent highs, consolidating a short-term correction seen during the latter part of this week, currently trading ~1.0820. At-the-money vols remain elevated as the outlook for both legs of the trade is subject to considerable uncertainty.
- Near-term ECB policy appears the most unpredictable since at least last October - when a set of weak flash PMIs underpinned the governing council upping their easing pace from quarterly to sequential meetings. Analysts are leaning towards another move in April (60% implied probability of cut), but risks for a hold have significantly risen following a hawkish STIR repricing after the German fiscal change announcement.
- Potentially decisive data coming up will be Monday's flash PMIs as well as the March inflation round kicking off next Friday - preliminary consensus points towards an uptick in expected sentiment likely underpinned by the German fiscal announcement, and on HICP, the hope would be for February's progress in the previously sticky services Y/Y inflation rate to continue - and a materialization of these factors could be used as arguments for further easing by the more dovish cohort of the governing council.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: Large SFR outright call trades for more
Feb-19 15:14
The Outright call is building up:
- SFRU5 96.25c, bought for 9.5 in 40k total (Screen and Pit).
CROSS ASSET: USDJPY tests Yesterday's low
Feb-19 15:08
- A quick extension higher in Tnotes helping push the USDJPY to session low, Yesterday's low in the latter is at 151.24, ahead the immediate support of 150.93.
- It is still a fairly limited move in Treasuries, a 5k buyer cumulative went through, and the price action doesn't seem to be Spread led, as the calendar spreads sees selling interest.
- Resistance in TYH5 moves down to 109.01.
US DATA: Redbook Data Suggests January's Retail Sales Weakness Was Temporary
Feb-19 15:08
The Johnson Redbook Retail Sales Index rose by 6.3% in the week ending Feb 15, accelerating from 5.3% prior and bringing February month-to-date sales up 5.8% Y/Y.
- While the latter was below retailers' target of a 6.3% Y/Y rise, this is a significantly more buoyant appraisal of recent consumer activity compared with the January Census Bureau Retail Sales which saw a surprising 0.9% M/M drop (vs -0.2% consensus).
- Though as we pointed out at the time, there may have been some seasonal adjustment issues among other idiosyncratic factors at play in that sequential Retail Sales drop, with sales rising 4.2% on a Y/Y basis in January (not far off the 4.5% Y/Y increase posted by the Redbook index in January - and this has subsequently rebounded).
- Johnson Redbook sales growth has routinely exceeded that of Y/Y Census Bureau Retail Sales since mid-2024, but even accounting for that differential points to "official" retail sales somewhere in the 3-4% Y/Y area in February so far.
- A reminder of the Johnson Redbook Index's methodology: "a sales-weighted of year-over-year same-store sales growth in a sample of large US general merchandise retailers representing about 9,000 stores. Same-store sales are sales in stores continuously open for 12 months or longer. By dollar value, the Index represents over 80% of the equivalent 'official' retail sales series collected and published by the US Department of Commerce."
