eFXplus DATA

• EUR/USD vols stay by record lows - 1-year implied vol extends it to 5.3

• Shows there's little expectation of realised volatility increasing soon

• Even ECB and FED meetings fail to inspire volatility buyers nL1N29P03N

• Selling implied volatility to gather premium remains a preferred strategy

• Less confident investors may prefer range binary options however

• Unlike short vol, range binaries only risk an up-front premium nL1N29P075

  
  

  
  

• A similar EUR/GBP picture to GBP/USD with a tough direction call

• Weekly shooting stars mixing it with hammer candles and hugging the 10WMA

• The weekly doji candles extending out from late December

• We have a bid by 0.8455 looking for an eventual topside breakout

• Breakout points at 0.8450 and 0.8595

• Dailies sideways and mid-cloud: looking to a series of 0.8477-84 Feb twists

  
  

• Beginning to look like cable carries on where it left off in Dec

• Choppy price action clouding direction with mixed studies and false breaks

• A bearish daily bias albeit messy one with stalling mid-cloud, 1.2955-65

• Weekly action little better with long candle shadows, above and below mkt

• On balance a fade into 1.3200 area favoured but would want stronger signals

• Potential beakout points at 1.2900 and 1.3284

  
  

• Threat of Wahun virus spreading over Chinese NY spooked markets nL4N29P406

• Nikkei -0.75%, AsiaxJP 1%, E-mini S&P -0.45%, 10yr UST yield -3bp 1.790%

• JPY crosses broadly lower, GBP/JPY -0.3%, AUD/JPY -0.6%, CNH/JPY +0.7%

• Charts - neutral momentum studies, 5, 10 & 21 DMAs and 21 day Bolli bands

• Little bias, 1.2955 Jan low then 1.2921, 38.2% Sep-Dec bounce first supports

• Yesterday's 1.3023 high then Friday's 1.3120 top are initial resistance

• 1.3000 203M and 1.3040 250M are today's close strikes

• UK jobs the focus today, see chart for polls

• EUR/USD traded in a 1.1089/98 range and is 1.1090/95 into the afternoon

• Asia decidedly risk-off as fears of spread of China virus impact sentiment nL4N29P406

• EUR/JPY down around 0.20%, but relatively steady, as AUD/JPY down 0.45%

• EUR/USD support at 1.1065/70 where 100-day MA and Dec 20 low converge

• Resistance at the 10-day MA at 1.1115 and break eases downward pressure

• German ZEW out today, but focus will be on moves in risk assets

• Off 0.1%, as risk, stocks and JPY cross selling dominates in Asia

• Nikkei -0.85%, AsiaxJP -0.9%, E-mini S&P -0.35%, 10yr UST yield -3bp 1.799%

• Spreading of China person to person virus the likely trigger nL4N29P406

• Upcoming Chinese New Year travel could see the Wuhan virus multiply

• Charts - neutral momentum studies, 5, 10 & 21 DMAs and 21 day Bolli bands

• Little bias, 1.2955 Jan low then 1.2921, 38.2% Sep-Dec bounce first supports

• Yesterday's 1.3023 high then Friday's 1.3120 high are initial resistance

• Touch softer - closed up 0.05% after recording a fresh 1.1076 Jan low

• UK to set out goals for EU trade talks - PM Johnson's spokesman nL8N29P3Y8

• Charts show momentum studies, 5, 10 & 21 DMAs edging lower - negative setup

• 1.1080/85, 61.8% of the Nov-Dec bounce and Jan double bottom held on close

• Sustained 1.1075 break a bearish signal, next stop 1.1042 76.4% Nov-Dec rise

• 1.1113, 38.2% of the January dip and 5 DMA is initial resistance

• 1.1100 350M, 1.1125 230M, and 1.1140-50 1.5BLN strikes cap

• Opened flat after recovering from a 1.2962 dip in the London morning

• Dip in response to Fin Min Javed stoking hard Brexit fears nL4N29O0AZ

• Close at 1.3010 failed to validate Friday's bearish outside day

• Charts - neutral momentum studies, 5, 10 & 21 DMAs and 21 day Bolli bands

• Little bias, 1.2955 Jan low then 1.2921, 38.2% Sep-Dec bounce first supports

• Yesterday's 1.3023 high then Friday's 1.3120 high are initial resistance

• 1.3000 203M and 1.3040 250M are today's close strikes - likely quiet in Asia

Bank of America Global Research, Barclays Research, and MUFG Research expect no change from tonight's BoJ policy meeting. MUFG recommends long USD/JPY as its ToTW targeting a move towards 112.

BofA: The Bank of Japan (BoJ) policy board concludes its first meeting of the year on 21 January. We expect the board to leave all key policy targets and forward guidance unchanged, in line with consensus...Barring an unexpected surge in global growth and inflation, the BoJ will likely keep all official targets on hold in 2020. But the central bank will likely persist with normalization in the broad sense as it continues to taper its asset purchases.

Barclays: We expect the BoJ to retain its current monetary policies, while raising its real GDP growth forecasts in the quarterly Outlook Report, factoring in a boost from the large-scale economic package compiled in late December.

MUFG: The BoJ is expected to keep their policy stance unchanged when they meet this week. The case for further imminent stimulus is likely to be weakened by the expected upgrade to the BoJ’s economic projections. The forecast for growth is expected to be revised higher for the first time in a year driven by the USD120 billion fiscal stimulus package unveiled last month by the government. 

• 42 pips is the break-even for a 1-week expiry USD/JPY straddle

• Gives holders the right to buy and sell spot at strike price at expiry

• Unhedged owner will need spot to be 42 pips away from strike to profit

• Choose just one leg (JPY put or call-right to buy, or sell) - just 21 pips

• It's due to record low implied volatility - hitting the price of options

• O/n (next day) options get BoJ meeting - cheap to protect nL1N29P04C

• Related comments nL1N29P04CnL1N29P05Q

  
  

• EUR/USD's fall from Dec 31 1.1240 peak was matched by 1mth implied vol drop

• The positive correlation between EUR/USD, 1mth implied volatility persists

• 30/60-day log correlations between EUR/USD and 1mth atm is +0.67+0.53

• EUR/USD bears need a daily close under cloud to tighten grip nL1N29P07O

• The incredible shrinking long could help dollar soar nL1N29P04S

• If there is a deeper EUR/USD drop, the 1mth implied atm might fall

• EUR/USD dropped sharply on Friday to match the Jan 10 1.1086 low

• On Fri it closed back within cloud that now spans the 1.1071-1.1105 region

• Mon sees 1.1086 low give way, bears need a break and close under the cloud

• A daily close under the cloud base in order to tighten their grip further

• EUR/USD trader TGM2334. EUR/USD matching lows nL1N29P03Q

• AUD/USD has fallen to 0.6862 from an early Europe intra-day high of 0.6888

• 0.6862 is the lowest level since Jan 10 (0.6871 was pre-weekend low)

• Dovish RBA expectations are helping weigh on the AUD RBAWATCH

• Bids expected near 0.6850 (option expiry level) if AUD/USD extends south

• 0.6849-51 = treble-day low, Jan 8-10 (0.6849 was also the Dec 19 low)

• Australian budget surplus in doubt as bushfire funding boosted nL4N29P0HK

• GBP traders held onto their shorts until the last moment during Dec election

• They bailed out of all shorts at the top and went long

• GBP/USD promptly dropped but traders kept buying nL1N29P03W

• Longs nearly quadruple in 4 weeks, Cable high/low 1.2900/1.3285 now 1.2985

• Sell-offs followed prior 1.29-33 consolidations after rallies nL1N29B0BJ

• There's clearly a high probability that consolidation/drop trend is repeated

• USD/JPY bulls increasingly likely to charge at a major Fibo nL1N29M05L

• 110.53 Fibo is a 76.4% of the 112.40 to 104.46 multi-month drop

• Spot has seen a 110.02-110.22 range according to prices on the EBS

• Japanese importer, investors bids trail down, stops mixed in sub-109.80

• Japanese exporter offers above. Buy stops clustered above 110.53 Fibo

• BOJ to stand pat, keep easy bias as risks linger nL1N29P01B

• EUR/JPY's 30/60-day log correlations with USD/JPY are +0.61/+0.62

• EUR/USD dropped sharply on Friday to match the Jan 10 1.1086 (EBS) low

• But spot could see a recovery due to cloud support, potential double bottom

• EUR/USD was hit after the bull trap above the 1.1163 Fibo last Thursday

• 1.1163 Fibo is a 50% retrace of the 1.1240 to 1.1086 drop

• Daily cloud, that now spans the 1.1071-1.1205 region, has halted the decline

• There is a potential double bottom being formed at 1.1086, Jan 10/17 lows

• EUR/USD trader TGM2334. EUR/USD "bull trap" nL1N29M058

• Net EUR/USD short position falls to a 20 week low

• The number of shorts now equivalent to just 6.7 billion dollars

• The change in betting is entirely due to the unwinding of short positions

• No one has gone long of EUR/USD, longs little changed in 3 months

• Long positions have been pared in January

• EUR/USD Jan performance 1.1086-1.1240, upper-half lowest range of downtrend

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• Touch softer in a 1.2980-1.3023 range with decent interest all day

• EUR/GBP also saw consistent flows in a 0.8530-0.8539 Asian range

• UK property bounced a record 2.3% on post election optimism nL8N29L5EF

• 1,000 EU financial firms plan to open UK offices after Brexit nL8N29M423

• Fin Min Javid, there will be no alignment with EU rules nL8N29M59S

• Hard Brexit beckons - neutral daily charts - 1.3000 357M strikes a magnet

• 1.2955 January low and earlier 1.3023 Asian high initial support-resistance

• Close below 1.3007 needed to validate Friday's bearish outside day

• AUD/USD recovers after gap down, inspired by new 6-mth lows in USD/CNY

• Stocks in Asia mostly higher after fresh Wall St records Fri

• AUD/USD tentatively evades Bollinger downtrend channel at 0.6876

• Will uphold broader positive trendline if it ends above 0.6866

• But bulls need 200 DMA resistance 0.6885 to break for clarity

• China holds off easing Loan Prime Rate, delaying stimulus nAZN0032O6

• Touch firmer, after a low key weekend for market moving news

• Only mover is oil up 1.6% on Libyan supply threats nL8N29O058

• Disparate outlook for EU and US growth weighed on Friday nL1N29M11G

• Charts show momentum studies, 5, 10 & 21 DMAs edging lower - negative setup

• Huge support ay 1.1080/85, 61.8% of the Nov-Dec bounce and Jan double bottom

• Sustained 1.1080 break a bearish signal, next stop 1.1042 76.4% Nov-Dec rise

• 1.1100/05 1.5BLN strikes cap and are a potential magnet in Asia