FOREX: USDCHF Weakness Extends Following Breach of Major Support
Apr-11 09:44
- The Swiss Franc continues to see material safe-haven flows as market worries intensify amid increasing US-China tariff tensions. This led the Citi CHF real effective exchange rate index to spike up to 4.5% to above 104.0 since "Liberation Day" last week, levels just shy of August 2024 highs.
- For USDCHF, price action has remained aggressive following the break of 0.8333 yesterday. The pair continues to trade at fresh ten-year lows, printing 0.8111 this morning. Emphasising the severity of the move, this extends the USDCHF selloff from the February highs to 11.8%, and the next target for the move is at 0.8028 - 1.382 projection of the May 1 '24 - Sep 6 '24 - Jan 13 price swing. The 1m 25 delta risk reversal in the pair stands at -3.24 points - that is also not far off the record low seen 2015.
- EURCHF meanwhile has pared some of its previous losses today as the single currency is the key beneficiary of dollar weakness this morning. Emphasis remains on the 0.9210 double bottom from last year.
- Focus turns to any US response to the latest China tariff increase - particularly as China has indicated that it does not intend to raise its US goods tariffs further as at current levels "there is no market acceptance for US goods exported to China". SNB domestic sight deposits data out Monday will give indication on any potential intervention this week.
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US: Large SFR put condor seller
Mar-12 09:39
- SFRJ5 95.87/95.81/95.75/95.68p condor sold at 1.5 in 40k total.
Some suggestions closing.
EGBS: Impending 10-year Supply Caps Rallies In Bund Futures
Mar-12 09:37
Bund futures have recovered from yesterday evening’s Russia-Ukraine ceasefire and US-Canada tariff reprieve inspired lows. Rallies have been capped by today’s 10-year Bund supply, due at 1030GMT. Futures are -7 ticks at 127.00, with a bearish technical theme still intact.
- The German curve has bear flattened, with 2-year yields 2bps higher and 30-year yields 0.5bps higher. Green leader Habeck re-stated his party’s position that debt brake reform for defence spending is not acceptable, but remains open to negotiation.
- 10-year EGB spreads to Bunds are biased slightly tighter, with the exception of DSLs. The 10-year OAT/Bund spread has pushed below 70bp for the first time since September in recent days.
- PGBs lag peripheral peers at the margin after the expected ousting of the Portuguese government and with 10- & 13-Year paper set to be auctioned this morning.
- Comments from ECB President Lagarde were not market moving, while Simkus and Centeno stuck to previous rhetoric.
- The ECB’s forward-looking wage tracker is due at 1100GMT, though broader macro focus remains on the US CPI report at 1330GMT.
EURIBOR OPTIONS: Put fly buyer trades for more
Mar-12 09:35
ERJ5 97.6875/97.62/97.5625p fly, bought for 0.75 in 14.5k Total.
