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By Richard Pace  —  Jul 06 - 04:20 AM

Impending FX option expiries can influence price action in the underlying spot market, so 40 billion euros of EUR/USD option expiries shouldn't be ignored.

Last week saw 20 billion euros in the 1.1200-1.1300 range play their part in containing price action nL1N2E605V, and DTCC option reported data shows 40 billion euros evenly spread between 1.1200 and 1.1400 over the next fortnight.

However, by comparison, only around 6 billion euros below 1.1200 in that time frame, meaning EUR/USD will be more vulnerable to volatility/losses below 1.1200 if it comes under renewed pressure, with less related hedge demand to underpin.

Those with exposure to FX options will typically offset it in the FX cash market, by buying below and selling above the strikes.
This (delta) hedging effect is what can influence price action and keep the cash rate close to the option strikes, more so as expiries approach.
Related comment nL1N2EA0G0.

For more click on FXBUZ











EURUSD option expiries Click here

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Jul 06 - 02:45 AM
  • Strong weekly close but failed to better 1.2541 previous weekly high

  • Bid from the Mon open keeps the run alive and eyes 50% Fibo

  • The Fibo taken off the recent 1.2812-1.2252 drop comes at 1.2532

  • Initial resistance close to mkt 1.2507, 21DMA with 1.2530 Jul 2 high behind

  • We bid by 1.2390 but strategy maybe revised as price climbs

  • Need to keep an eye on EUR/GBP, which posted a weekly bearish engulfing line














GBP/USD Trader:

GBP/USD daily candle chart: Click here

GBP/USD weekly candle chart: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jul 06 - 02:20 AM
  • Cable rises to 1.2504 as risk-sensitive GBP benefits from Asian equity gains

  • Nikkei closed +1.8% nL4N2ED0MN. 1.2470 was Asian session low nL1N2ED03L

  • Offers may emerge near 1.2530 (July 2 high) if GBP/USD extends north

  • 1.2530 = two pips shy of 50% of 1.2812 (June 10 top) to 1.2252 (June 29 low)

  • Friday's range was 1.2440-1.2495 (when U.S. markets were closed)

  • COVID-19 cases up in 39 US states nL1N2EC043. Sunak Wednesday nL8N2EC0U7

GBPUSD Click here

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jul 06 - 02:10 AM
  • EUR/USD: 1.1200-05 (475M), 1.1210-15 (1.1BLN), 1.1250 (301M)

  • 1.1385-1.1400 (1BLN). Related nL1N2EA0AR

  • EUR/GBP: 0.9100 (263M). NZD/USD: 0.6425 (410M), 0.6460 (270M)

  • USD/JPY: 106.60 (450M), 106.70-75 (375M), 107.00 (210M), 107.60-65 (300M)

  • EUR/JPY: 122.15 (272M)


EURUSD option expiries Click here

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Jul 05 - 11:45 PM
  • EUR/USD opened at 1.1250 and after a dip to 1.1245 it grinded higher

  • It is currently at the session high around 1.1280 where sellers tipped

  • The move higher was fuelled by EUR/JPY buying with cross rising 0.45%

  • Asia was risk-on - led by 4.25% rise in the Shanghai Composite

  • EUR/USD resistance at last week's high at 1.1302

  • Break above 1.1310 targets a double-top around 1.1350

  • Support at the 21-day MA at 1.1262 and 10-day MA at 1.1248

  • For more click on FXBUZ










Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Jul 05 - 09:55 PM
  • AUD/USD above last week's 0.6952 high and traded to 0.6963

  • AUD/JPY buying underpinning as buoyant equity markets support

  • S&P futures up 0.80% while the Shanghai Comp is up 1.80%

  • AUD/USD resistance at double top around 0.6975

  • Break above 0.6980 targets the June 10 high at 0.7069

  • For more click on FXBUZ










aud/usd Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 05 - 07:40 PM
  • Flat - no game changing weekend news - US coronavirus surges nL1N2EC043

  • Banks urge Britain and EU to sort out financial market access nL8N2EA3WN

  • French economy probably bouncing back faster than expected, BdF nL8N2EC0HM

  • Charts; momentum studies, 5, 10 & 21 DMAs conflict - neutral setup

  • 1.1157, 38.2% April-June rise, a base and initial pivotal support

  • 1.1353 mid June high capped in late June - first significant resistance

  • London 1.1219 low and Thursday's 1.1302 high initial support-resistance

  • 1.1200-05 475M, 1.1210-15 1.1BLN, 1.1250 301M close strikes

  • For more click on FXBUZ

eur jul 6 Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 05 - 07:10 PM
  • -0.1%, no game changing weekend news, coronavirus spread caps sentiment

  • UK close to GBP 500mln Sanofi/GSK COVID-19 vaccine deal -report nL8N2EC09O

  • UK says Huawei must meet conditions for 5G network involvement nL8N2EC08J

  • Techs; momentum studies, 5, 10 & 21 DMAs conflict - neutral setup

  • Last week's bounce leaves GBP in familiar territory - suggests consolidation

  • 1.2506 21 DMA and 1.2532 50% of the June fall capped, now pivotal resistance

  • Friday's 1.2440 London low and 1.2430 10 DMA are initial support

  • For more click on FXBUZ

gbp jul 6 Click here

Source:
Refinitiv IFR Research/Market Commentary
By John Noonan  —  Jul 05 - 05:55 PM
  • EUR/USD opens unchanged around 1.1245 after holiday affected Friday session

  • EUR/USD is back in range-trading mode as various factors offset each other nL8N2EA31RnL1N2EA0AF

  • The 10-day MA comes in at 1.1245 and the 21-day MA comes in at 1.1261

  • EUR/USD likely to revert to those readings while the range trading continues

  • Range trading may persist until EU summit on rescue plan on July 17/18

  • Support at 1.1168 where a double-bottom has formed

  • Resistance is found around 1.1350 where a double-top has formed

  • For more click on FXBUZ










Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jul 05 - 03:55 PM
  • AUD/USD down 0.15% in early Asia as worldwide virus cases cross 11.34 mln

  • AU's Victoria reports 108 new virus cases Sat, biggest jump in over 3 months

  • Victoria's Premier defends hard COVID-19 lockdown nL4N2EC01F

  • Robust economic datanL4N2EA0HF, metals, commodities, stocks rally underpin

  • RBA meets Tues, expected to reiterate rates will remain low for some years

  • Resistance 0.6950-55, 0.6974-77, support 0.6900-05, 0.6875-80

  • For more click on FXBUZ


New construction in Australia plateaus: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jul 03 - 09:35 AM

Most of the benchmark 1-month implied volatility contracts for the major FX pairings are trading coronavirus crisis lows amid the U.S. holiday, reflecting the recent risk appetite and lack of actual volatility.

Massive stimulus and limited yield leaves most currencies side-lined while dealers wait to see the effects of lockdown easing on the growth recovery.

However, at current levels, there may be opportunities to benefit from volatility protection. nL1N2EA08T

Recent option flow has been USD negative, especially in EUR/USD nL1N2E909Z, which is no real surprise when looking at a recent Reuters poll which shows analysts see the dollar's dominance diminishingnL1N2EA07P.

After being pinned by 20-billion euro option expiries between 1.12-1.1300 this week, EUR/USD traders should be aware of another EUR 20-billion in this zone over the next 2 weeks, and EUR 20-billion 1.1300-1.1400, but significantly less to the downside, which may weaken potential EUR/USD support. nL1N2EA0AR

GBP/USD 1-month vol hit new crisis lows sub-8.0, and 1-month risk reversals have seen GBP put (downside) vol premiums fall to 0.7 from 1.4 over calls this week.

For more click on FXBUZ



EURUSD option expiries Click here

Benchmark 1-month implied volatility Click here

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Jul 03 - 07:35 AM

For the last few weeks, option traders have been paring downside protection to help fund topside options, but that's left a void which could exacerbate any near term squeeze lower.

DTCC data shows option expiries over the next couple of weeks are mainly concentrated between 1.1200 and 1.1400, with little below.

Related delta hedging of impending expiries can help to contain the spot market, as we have seen this week, where 20-billion euro expiries between 1.1200-1.1300 played their part. nL1N2E605V

Over the next two weeks there are 20-billion euro expiries between 1.1200-1.1300 and similar size between 1.1300 and 1.1400 to help slow any further topside progress, but only 6-billion down to 1.1100.
Less expiries mean less delta hedging flow to stem any downside volatility/losses.

With EUR/USD widely expected to head higher over coming months nL1N2EA07P, any setback will present better opportunities to add longs, but if this lack of option coverage does play a part, there may be better levels to buy that dip.

Related comment nL1N2EA08T

For more click on FXBUZ


EURUSD option expiries Click here

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jul 03 - 06:05 AM

Although British Prime Minister Boris Johnson says there are other good options if a trade deal between the European Union and the United Kingdom can't be agreed, those options are unlikely to be good for the pound.

Johnson told LBC radio on Friday that an "Australia-style" arrangement would be a "very good option" if an EU-UK trade deal can't be agreed nL8N2EA1T4.
Last Saturday, Johnson told his Polish counterpart that Britain is ready to quit its transitional arrangements with the EU on "Australia terms" if there is no deal nL8N2E409Y.

On Thursday, EU chief negotiator Michel Barnier said "serious divergences remain" between the EU and Britain.
This was echoed by his UK counterpart David Frost, who said there are "significant differences" between the EU and Britain "on a number of important issues" nL8N2E93R9.

Fear that the EU and Britain might not reach a trade deal before-year end influenced the pound's drop to a 13-week low against the euro, 1.09, at the start of this week.
EU-UK trade negotiations resume next week.
Related comment: nL1N2E60A8

For more click on FXBUZ


GBPEUR Click here

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jul 03 - 06:00 AM
  • Cable eased to test 1.2440 after UK PM Johnson addressed big EU-UK issue

  • Johnson: Other good options if we can't reach deal with EU nL9N2CG01K

  • More: nL8N2EA1T4. 1.2440 was two-day low after French political news

  • See: nL8N2EA18E. 1.2470 was rally high from the 0740GMT 1.2440 low

  • 1.2485 was early Ldn high. UK June final service PMI 47.1 vs 47.0 f/c

  • See: nL8N2E94UO. EU-UK trade talks resume next week nL8N2E93R9

GBPUSD Click here

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Jul 03 - 02:55 AM
  • EUR/USD continues to trade inline with likely SNB actions

  • Top and tailing effect upon EUR/USD of SNB intervention nL1N2E70DG

  • EUR/USD boosted early yesterday rising from 1.1250 to 1.1302 (intervention?)

  • Pair subsequently sliding to 1.1224 (rebalancing?)

  • Switzerland may need to boost intervention nL1N2E90C6

  • SNB is already one of the biggest FX players, maybe the biggest player

  • Bigger intervention risks greater distortion. To step back risks disorder



EUR/CHF and EUR/USD hourly Click here

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Jul 03 - 02:10 AM
  • In June EUR/USD found support ahead of the 1.1157 Fibo = bullish

  • 1.1157 Fibo: 38.2% retrace of the 1.0728 to 1.1422 (April to June) EBS rise

  • Flow data signals window of opportunity for EUR/USD longs nL1N2E90CY

  • While the overall scope is for gains to test 1.1348/53 June 23/16 highs

  • A large upper shadow on Thur's candle has stymied EUR/USD bulls near-term

  • EUR/USD Trader TGM2334. Previous EUR/USD update nL1N2E908J

Daily Ichimoku Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jul 03 - 01:30 AM
  • AUD/USD trades in well supported but narrow 0.6914-0.6932 range in Asia Fri

  • Bolstered by rally in metals, commodities & stocks; ASX 200 +2.2% this week

  • Australia May retail sales see record surge as economy reopensnL4N2EA0HF

  • Robust U.S. jobs data, stellar Caixin China services PMI boost risk mood

  • U.S. holiday dampens trading activity but rally likely to resume next week

  • Global surge in new virus cases taken in stride; U.S. at recordnL1N2E92RJ

  • Resistance 0.6950-55, 0.6974-77, support 0.6900-05, 0.6875-80

  • For more click on FXBUZ


aud 2 jul 3: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 03 - 12:10 AM
  • -0.1%, towards the base of a tight 1.2457-1.2472 range with modest interest

  • UK to relax England's quarantine rules for visitors - bold move nL8N2E96DU

  • Market didn't expect Brexit and does not expect 'no deal' nL1N2EA00P

  • Consumer confidence bounce nS8N2DA01F factories plan lay-offs nL4N2E92VW

  • Techs; positive momentum studies, 5, 10 & 21 DMAs conflict - neutral setup

  • Bounce leaves the price at familiar levels - suggests consolidation

  • 1.2514 21 DMA and 1.2532 50% of the June fall capped, now the pivotal level

  • 1.2422-28 5 & 10 DMAs and earlier 1.2472 high are initial support-resistance

  • For more click on FXBUZ

gbp 3 jul 3 Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 02 - 09:55 PM

Sterling has been resilient this week despite UK GDP data undershooting forecasts nL8N2E714Z and manufacturing PMI only matching expectations nL8N2E760Z.
An optimistic sterling poll released by Reuters on Thursday may explain the GBP bounce.

Analysts in the poll expect sterling to appreciate 4% in the next year if Britain and the European Union reach an agreement on future trade relations, as they forecast nL8N2E82DJ. This suggests there is demand for the currency on dips and it's up 0.5% this week, though short-covering may have played a role based on IMM data nL1N2E6059.

Yet the EU have maintained since negotiations began, that in order for the UK to retain access to European markets, they must comply with core EU regulations, known as an 'even playing field'.
The UK under PM May accepted this concept, but under PM Johnson, it is equated with compromising Britain's sovereignty. A face-to-face meeting between the EU and UK's chief negotiators was cancelled on Thursday due to lack of progress nL8N2E93R9.

The EU need to protect the interests of their members and deter any further countries from leaving, while the UK is now led by ideological Brexiteers.
The EU's drawn-out coronavirus budget negotiations show that speed is not one of their virtuesnL8N2E929J. Meanwhile, the clock ticks towards the Dec.
31 deadline as both sides prepare for a 'no deal' Brexit.

For more click on FXBUZ


gbp 2 jul 3 Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 02 - 09:40 PM
  • +0.05%, extending yesterday's 0.15% gain ahead of retail sales

  • Retail sales came in at 16.9%, against a poll of 16.3% - no impact

  • Risk continues to lead - positive Asian stocks, ASX 200 +0.9%, Nikkei +0.5%

  • Techs; momentum studies, 5, 10 & 21 DMAs conflict or coil - neutral setup

  • Choppy 0.6777-0.6977 range is in it's fourth week - set to extend

  • Horizontal 0.6808-0.7003 21 day Bollinger bands also support range trading

  • NY 0.6902-0.6952 post payrolls range is initial support-resistance

    For more click on FXBUZ

aud jul 3 Click here

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jul 02 - 07:25 PM
  • Flat early - closed -0.06%, after stalling at 1.2532, 50% June fall

  • GfK consumer confidence strongest since start of COVID lockdown nS8N2DA01F

  • UK factories increasingly plan lay-offs, survey shows nL4N2E92VW

  • Techs; positive momentum studies, 5, 10 & 21 DMAs conflict - neutral setup

  • Bounce leaves the price in familiar territory - suggests consolidation

  • 1.2515 21 DMA and 1.2532 50% of the June fall capped, now pivotal resistance

  • 1.2458 NY low and 1.2424/29 5 & 10 DMAs are initial support

gbp jul 3 Click here

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jul 02 - 07:15 PM
  • USD/JPY fails to make much headway despite robust U.S. jobs datanL1N2E82LC

  • Trades in a relatively narrow range of 107.34-107.72 on Thursday

  • Rise limited by concerns about surging COVID-19 cases in many U.S. states

  • Buoyant risk mood supports; S&P 500 registers gains of 4% this week

  • U.S. holiday Fri dampens trading activity; muted activity likely in Asia too

  • Support 107.30-35, 107.04-12; resistance 107.70-75, 107.95-108.00

  • For more click on FXBUZ


Payrolls: Click here

Which sectors gained jobs in June?: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jul 02 - 06:00 PM
  • AUD/USD opens 0.15% higher; strong U.S jobs data lifts risk moodnL1N2E82LC

  • Boosted by rise in metals & commodities; copper touches highest since Jan 22

  • Rise limited by concerns about surging COVID-19 cases in many U.S. states

  • AU May retail sales Fri; huge recovery to +16.3% expected from -17.7% in Apr

  • U.S. holiday Fri to dampen trading activity; China Caixin services PMI due

  • Resistance 0.6950-55, 0.6974-77, support 0.6900-05, 0.6875-80

  • For more click on FXBUZ


A miraculous COVID-19 recovery but Dr Copper needs more tests: Click here

Source:
Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Jul 02 - 04:06 PM
  • CFTC Commitment of Traders report Click here to Jul 6 owing to US holiday

  • In Jun 24-30 period $IDX gained 0.75%, may hint recent USD shorts lightening

  • EUR -0.67%, longs have risen since end May now +118k contracts 1099741NNET

  • USD/JPY +1.35%, upbeat glbl recovery tone see haven exit, specs long JPY 27k

  • GBP -0.9%, Brexit angst weighs on GBP; spec short likely grew 1096742NNET

  • AUD -0.37%, relatively firm on rising commods, short cut since June extremes 1232741NNET

  • For more click on FXBUZ

 

Majors Chart: Click here

IMM Position Table: Click here

Source:
Refinitiv IFR Research/Market Commentary
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