• Overnight (1-day) expiry NZD/USD options now get Wed's RBNZ rate decision

• Implied volatility higher to reflect increased actual volatility risk

• It's 33% higher at 18.0, from 12.0 early Monday - before RBNZ capture

• Premium/break-even for straddle 33% higher too at 0.75% NZD, or 50 USD pips

• Shows spot moves in either direction, holders must capture before profit

• Current levels of o/n implied volatility last seen before September FOMC

• Recall yesterday's actual spot range was 122 USD pips

• Related nL2N2GJ05L

  
  

• EUR/USD options charged premium for EUR calls vs puts (topside) since June

• From 1 to 12-months - it showed risk of EUR gains, was greater than losses

• If ignoring early March panic pricing - premium was at multi year highs

• Risk reversal contracts show that premium being eroded over recent weeks

• 1-month risk reversal now just 0.15 from 0.9 EUR calls, 1-year 0.3 vs 0.8

• It's a significant decline, and shows how this derivative is re-pricing risk

• Related comment nL2N2GI092

  
  

  
  

• EUR/USD saw a big drop on Monday, but there is a good chance of a recovery

• That is due to solid support at 1.1691 Fibo that could limit further falls

• 1.1691 Fibo is 38.2% of the 1.1169 to 1.2014 (June to September) rise

• Thick cloud, that spans the 1.1567-1.1742 region, a huge obstacle for bears

• EUR/USD Trader TGM2334. Previous update nL2N2GI04Y

• AUD/USD stabilizes after brief dip below 0.7200 on RBA Debelle's comments

• Dep Gov says c.bank assessing various monetary policy options nL3N2GJ0PC

• AUD intervention, negative rates to meet inflation, employment goals touted

• RBA had previously said that negative rates were "extraordinarily unlikely

• 0.7192 Sept 9 low tested, holds again; range in Asia 0.7192-0.7236

• Falling commodity prices, rising risk aversion to cap gains

• Focus shifts to Powell testimony due later Tuesday nL2N2GI23T

• Support 0.7192,0.7179 (55-DMA), 0.7170, resistance 0.7235-40, 0.7270-75

• For more click on FXBUZ

• -0.1% in a 104.46-104.75 range - liquidity an issue on the Tokyo holiday

• Soft markets, Nikkei futures -0.5%, AsiaxJP -0.4%, E-mini S&P flat

• 104.35 500M, 104.50 500M, 105.00 676M and 105.20 630M are the close strikes

• Charts; 5, 10 & 21 DMAs trend lower, horizontal Tenkan & Kijun lines

• Net bearish technical setup targets a test of Monday's 104.00 low

• Sustained 104.00 break would target 103.66, 76.4% March bounce

• 104.52 lower 21 day Bolli band suggests selling strength not breaks

  For more click on FXBUZ

• Flat in a 1.2802-1.2821 range - plenty of interest, despite Tokyo holiday

• Fears of a second COVID-19 wave and fresh lockdowns grows nL5N2GI0V2

• PM to urge Britons to go back to working from home -Telegraph nFWN2GI0TF

• Techs; 5, 10, 21 DMAs, 21 day Bollinger bands and momentum studies fall

• Bearish setup for a 1.2721-1.2125 test, 61.8% June-September rise & 200 DMA

• 1.2659 falling lower 21 day Bolli band suggests market no longer oversold

• Sustained break of the 1.3074 21 DMA needed to end downside bias

• Technical and fundamental outlook suggests base the weak side nL2N2GJ009

  For more click on FXBUZ

• RBA Deputy Governor Debelle said RBA assessing policy options nS9N2FN004

• Debelle said RBA watching developments in FX market

• He didn't rule out intervention if AUD out of line with fundamentals

• Debelle's comments are being taken by market as being on the dovish side

• AUD/USD traded to 0.7205 with yesterday's low at 0.7200

• The 55-day MA comes in at 0.7179 and break would be bearish

• For more click on FXBUZ

The AUD/USD has shown resilience through September's equity market correction, but that could change if key commodities start to slip from historically high levels.

The S&P 500 index fell 8.24% between September 2 and 18 while NY copper gained 4.36% in the same period and posted a two-year high above 3.1000.
The disconnect between equities and growth commodities, such as copper and iron ore, underpinned AUD sentiment enough to keep the Australian dollar within 1% of its two-year high at 0.7414 hit on September 1.

Global equities came under heavy pressure again on Monday when macro concerns rattled investor confidence.
Rising coronavirus infections in the northern hemisphere, deteriorating relations between China and the West and heightened political uncertainty in the U.S. are stoking concerns that the expected global recovery may stumble nL5N2GI5LQnL1N2G10MFnL2N2GI1Y9.
Global growth will likely weigh on key commodities in the short term at least.

The AUD/USD has been comfortably above the 55-day moving average (DMA) since April 24 when it was trading below 0.6400.
The 55 DMA comes in at 0.7180 and a close below would warn a deeper correction is underway.

For more click on FXBUZ

• USD/JPY opens 0.2% higher after strong rebound from 6-month low of 104.00

• Bolstered by broad dollar strength on safe haven demand

• Rising COVID-19 cases, sliding stock market, U.S. election uncertainty boost

• Lightened trading volumes due to Japan Mon-Tues holiday exaggerates moves

• JPY buying on crosses limits its losses versus USD; AUD/JPY down 0.8%

• Fed speakers in focus this week, Powell to testify 3 times starting Tuesday

• Resistance 105.10-20, above confirms low in place, will open 105.50, 105.80

• Support 104.45-50, 104.00-10, 103.65-70; related nL2N2GI05G

• For more click on FXBUZ

• AUD/USD opens 0.92% lower after falls in equity and commodity markets nL2N2GI1Y9

• NY copper slid 2.46%, as global growth concerns weighed on risk sentiment nL3N2GI1OY

• AUD and NZD were worst performing currencies, as USD broadly moved higher

• AUD/USD support is at the Sept 9 low at 0.7192

• Resistance is at 0.7275/85 where the 10 & 21-day MAs converge

• RBA Deputy Governor Debelle speaks today and may impact RBA expectations

• Moves in Asian equity markets to influence AUD/USD price action

• For more click on FXBUZ

• USD/JPY rebounded after making 6-month EBS lows at 104

• Daily RSIs had gotten oversold, reinforcing the bounce

• 2018-19 lows all in the 104.00s, so close below would be important

• A close above lower 21-d Bolli at 104.64 favors 21-DMA test, 105.79 last

• But a daily range above the Bolli is key to the mean reversion trade

• 38.2% Fibo of September's drop, Aug lows & tenkan cap at 104.97-5.20

• A break and close below 104 should target props by 102 & 101.18 2020 low

  For more click on FXBUZ

The dollar surged higher on Monday, enjoying its best day since June as stocks tumbled on increasing pandemic, economic and political concerns, knocking the euro back and pummeling sterling.

Technical indicators signaled a deeper rebound was possible, with the dollar index clearing the neckline of its inverted head-and-shoulders chart pattern nL2N2GI152.

The break would indicate a measured objective of 2% gains above that neckline to 95.49.
That target is also near the 61.8% Fibo of the June-September slide.

Investors have used the U.S. currency, made cheap after the Fed slashed interest rates near zero, to fuel reflation trades in stocks and other risk assets, the reversal of which means they must buy back dollars.

Technically, a thick 93.74-4.97 daily ichimoku cloud and the 38.2% Fibo are interim obstacles to the dollar's recovery, along with the downtrend line from March at 94.81 on Tuesday.

EUR/USD struck a six-week low, but because the euro is also a major reserve currency and also used to fund risky trades, it's more of a task to get its topping formation to break August's low and the 38.2% Fibo of the June-September advance at 1.1695/91, widely seen as 1.17 support nL2N2GI0QI.

ECB President Christine Lagarde said exchange rate developments must be assessed carefully in light of the uncertainties nF9N2G600S, as the pandemic forced new restrictions across Europe nL5N2GI2YJ.

Early risk-off flows drove USD/JPY to key support at 104 before a sharp rebound toward 105.
Failure to break 104 amid widespread dollar buying left tight trailing stops on USD/JPY shorts at risk, as did oversold daily RSIs.

Long-term charts remain bearish, and the yen is favored against most currencies, particularly high-beta and commodity-linked currencies.

Sterling slid back toward September's 1.2763 low as risks of new UK pandemic restrictions grew nS8N2G605M, while there was still no progress in reaching a Brexit deal, with the October window for doing so approaching nL2N2GI0QH.

GBP/JPY has nearly retraced half of its recovery from March's lows to this month's high at 133.41 versus Monday's 133.52 low.

Japan is on holiday until Wednesday, but there is the usual unease about the Ministry of Finance using verbal intervention to prevent the safe-haven yen from rallying too far.

WTI fell over 5%, silver roughly 9% and gold 2.2%, with copper off 2.8% as stress in stock markets and other reflation trades creates pressure to take profits in other assets.

Fed Chair Jerome Powell and Treasury Secretary Mnuchin go before Congress on Tuesday.

• AUD/USD falls in Europe am; risk-off sees investors sell stocks, commodities

• EM & high beta ccys sinks vs US$, USD/CNH nears 6.8100, copper falls

• AUD/JPY nears 75.25, AUD/USD slide extends in NY , trades 0.7270-0.7200

• Very little bounce seen as risk-off persists, pair near day's low late

• Techs are bearish, RSIs fall, head & shoulders pattern completes

• Timing is bad for investors that have gone long aussie nL2N2GI0TM

• For more click on FXBUZ

SEB Research flags a scope for EUR/USD to grind lower in Q4.

"Despite our constructive view on the EUR/USD in the medium-term, we believe there is a good chance that risky assets experience a setback during Q4, pressing EUR/USD temporarily lower," SEB notes. 

"The COVID-19 pandemic continues to have a negative effect on peoples’ behaviour and production as long as a vaccine is not widely available and mobility restrictions remain in place. This, together with increasing COVID-19 infections, creates a lot of uncertainty regarding recovery in Q4. The recovery gets fully going only when the household savings rate starts falling and the companies start hiring on a large scale. If COVID-19 remains with us for the coming 3-6 months, it could badly hinder the recovery process if private spending gets stuck at low levels. If the recent rapidly improving economic data in Q3 starts to falter and the incoming data points to dismal growth for Q4, it is likely to result in a setback in risk assets. This would work in favour of the dollar and increase expectations of further ECB easing, e.g. rate cuts. It is good to bear in mind that unlike the Fed, the ECB has never shut the door for further rate cuts," SEB adds. 

• GBP/USD falls hard into Lon fix, -1% at 1.2785, NorAm range 1.2871-1.2779

• Ramped up UK lockdown fears adds to lingering Brexit woes nL5N2GI0V2

• Bears eye 1.2763 Sep 11 low, then 200-DMA 1.2727 & daily cloud base 1.2719

• Below daily cloud mid-July's dbl bottom by 1.2520, June low by 1.2520 eyed

• Bulls inability to hold abv daily cloud top ushers in capitulation, caps mkt

• Widening Bolli's hint at pot'l for increased vol amid Brexit, COVID, US elex

Bank of America Global Research discusses its preferred trading bias on G10 into year-end

"We are concerned about risks in the rest of the year that could trigger a market correction. We expect that a weak recovery of the global economy and delays on when a Covid19 vaccine will allow a move back to normality will squeeze long positions in risk assets. We see limits in further macro policy support. For the rest of the year, we are positive on JPY, USD and CHF against EUR, GBP, CAD and SEK," BofA notes. 

"Based on these arguments, we went short USDJPY in mid-July via a 3 month USD put /JPY call, to hedge against higher volatility this fall...

We went short GBP/CHF on July 29, spot ref 1.1870, via a 1x2 GBP/CHF 1.1830/1.1400 6mth ratio put spread. We remain bearish GBP/CHF following the recent move lower," BofA adds.

EUR/USD slumped 0.7% on Monday as investors opted for safe havens in the face of growing pandemic nL5N2GI2YJ, political and financial uncertainties nL3N2GI0GW, compounding risk factors threatening to send the euro falling out of the range it has held since late-July.

The death of Justice Ruth Bader Ginsburg added another layer of uncertainty to an already heated U.S. election season nL2N2GH04C, helping to encourage safe-haven dollar buying.

ECB President Lagarde's said current uncertainty required assessment of exchange rate developments nF9N2G600S, indicating possible concern about euro strength.

Potential lock downs in Europe due to a COVID-19 second wave nL3N2GI184 have investors doubting Europe's already fragile recovery.

Euro zone inflation expectations remain fragile after 5-year/5-year inflation linked swaps EUIL5YF5Y=RR peaked in August and now appear to be trending lower.

Options markets indicate growing concerns about EUR/USD downside as risk reversals show vol premiums for EUR/USD calls over puts diminishing while expiries with strikes in the 1.1600-1.1700 range are bought nL2N2GI092.

CFTC data show euro longs were reduced nL1N2GF1KK, a continuation of which should hurt EUR/USD.

A test of 1.1685/1.1725 support is likely.
A break could lead to a test of the 1.1500 area.

For more click on FXBUZ

Credit Agricole CIB Research discusses its expectations for this week's RBNZ policy meeting. 

"The short period between next week’s RBNZ meeting and its previous meeting means that there is little data to update the central bank on the economy, which suggests it should not change its view significantly," CACIB notes. 

"The main concern for the RBNZ remains that NZ’s border remains closed, however, which is hurting NZ’s large tourism industry. We do not think this is enough for the RBNZ to cut rates towards zero or into negative territory next week or increase its asset purchases, especially following its large increase in asset purchases at its last meeting. The NZD’s rally has also reflected improving local data and is not out of line with the RBNZ’s forecasts. And in any case, RBNZ Governor, Adrian Orr, has expressed less concern about the currency of late. The RBNZ will continue to talk up the possibility of negative rates and may provide more specifics about how they would be implemented in NZ if needed," CACIB adds. 

Citi maintains a bullish bias on GBP into year-end.

"GBP mildly outperforming EUR, despite headlines on Friday and over the weekend rumouring scope for stricter lockdowns across the country, including in London. We continue to await plans on further furlough payments past October," Citi notes. 

"On the Brexit front, the weekend brought little new but CitiFX Strategy continues to believe Brexit will dominate price action. We remain more sanguine than consensus on No Deal risk though," Citi adds. 

• Sharp reversal from 1.2965 and cloud top rejection significant

• Low of 1.2835 allows us to lower our 1.2910 short stop to entry

• Need a close under the 1.2903 10DMA to bolster the bear move

• Three consecutive daily failures to hold a cloud break: 1.2964 top key

• 14-day negative momentum stretched but daily RSI has bearish room

• Weeklies holding below 200WMA, 1.2935

  
  

• EUR/USD down 0.46% today and deeper retreat is likely nL2N2GI076

• Risk averse movement hit EUR/JPY hard, pair breaks big level nL2N2GI076

• A deeper EUR/USD retreat would be healthy for the trend

• Min objective for tech correction of rise from June low is 1.1691

• A drop to that point should see number of longs pared further nL2N2GI053

• 55-DMA is 1.1723. Top of a rising daily Ichimoku cloud 1.1709

• Cloud thick to 1.1542. Hard to break. 1.17 is a good spot to pick a base

• 
  

• EUR/JPY has dropped 0.85% to 122.74. Daily Ichimoku cloud base is 123.03

• Big moves have followed prior cloud breaks 4 and 7%

• Traders are very long EUR and there's a rise in risk aversion nL2N2GI076

• EUR/JPY has dropped 3.4% since start September

• September is half financial year in Japan. Heightens chance repatriation

• Levels worth note. 100/200-DMAs 122.13/120.88. Jul 10 low 120.30

• 
  

• USD/JPY's scope grows for deeper losses under the July 104.20 low

• That has unmasked the major 103.67 Fibonacci level

• 103.67 Fibo is a 76.4% retrace of the 101.18 to 111.71 March rise

• We are looking to get short on recovery attempts to 104.99

• Friday/Thursday 104.87/105.18 highs should stem near-term corrections

• EUR/JPY range so far has been 123.20-123.90, according to EBS prices

• USD/JPY Trader TGM2336. Previous update nL1N2GF05Z

Adds chart

• CNH rose 3.6% between July 31 and Sep 17

• CNH has since dropped. Two day decline of 0.5%

• CNH has a big effect on large TWI components like EUR

• Day CNH began its rise EUR/USD reached 1.1908 then struggled

• In July EUR/USD rose rapidly, thereafter rally slowed markedly

• CNH peaked Sep 17. EUR/USD has rebounded strongly from Sep 17 low @ 1.1737

• Likely more EUR/USD longs pared before uptrend is resumed nL2N2GI053

•