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Intermarket:
• SP Futures 3961 (+0.07%)
• EUSTXX 3839 (+0.23%)
• Crude Oil 61.53 (-0.04%)
• US 10YR 1.72% (+1.20%)
• EurUsd 1.1765 (+0.01%)
• UsdJpy 109.96 (+0.18%)
• DAX 14888 (+0.32%)
Risk appetite is resilient as we approach the European open, following a decent performance during Asia trade. Bond yields are up, US Dollar a tad stronger. Oil slightly lower. Gold down. To note, current flows may be distorted by month-end/quarter-end flows.
Little in the way of drivers. Markets seem to be shrugging off margin call concerns by Archegos. But traders may remain on edge amid quarter-end flows and into President Biden’s “economic vision” speech in Pittsburgh tomorrow where he is expected to announce further details on stimulus plans and tax plans. EUR may remain pressured after the FT reported the German constitutional court blocked the ratification of EU recovery fund, ordering the President not to sign the agreement into law until the court has examined the motion bought up by some Eurosceptics. Reportedly, leveraged accounts have begun to reduce long positions
Matters that Matter:
• Global banks brace for losses from Archegos fallout, may amount to more than $6 bln
• SEC/FINRA: Wall Street banks summoned after Hwang’s blow-up
• Biden urges states to pause COVID re-openings, infrastructure plan will avoid gas tax hikes
• China approves sweeping electoral shake-up for Hong Kong -HK politician
• Turkish Lira weakens after Erdogan fires central bank deputy governor
• Ontario Covid situation “out of control”
• Ex-RBA member Edwards sees AUDUSD at .8000
Majors 1-Day View:
USDJPY
- Prices posted a 4th higher daily low in a row on Monday, maintaining a bullish stance. However, prices remain stretched upon approach to key resistance at 110.00. As such, with caution, we prefer to buy dips towards 109.70s today.
- Test of option barriers at 110.00 likely
- Prices supported on higher yields
- Large stops reported above 110.00
EURUSD
• Prices posted losses of over ½ Big Fig yesterday, maintaining the bearish bias into today. With momentum indicators at oversold levels, selling into rallies may be the better strategy.
• Prices trading heavy on Covid issues, USD strength.
• Option barriers reported at 1.1750, breaks bearish.
AUDUSD
• Prices posted the 2nd higher daily high & low in a row on Monday, but gains were limited. Buyers returned in Asia trade, posting a 3rd higher high, but with signs of divergence in momentum, the correction may encounter resistance around .7670s. As such, we prefer to sell around .7670 today.
• Resilient despite USD strength, but recovery losing strength.
• .7670 resistance, .7610s support.
GBPUSD
• Prices posted 2nd higher daily high & low in a row on Monday, but initial gains were reversed as sellers returned from close to 1.3850s, prices declining by almost 1 Big Fig. As such, signals for today are pointing lower.
• USD dynamics main focus.
• Range trading persists.
FX Relative ATR Grid
Comment: Volatility contracted basically across the board yesterday. USD posted the narrowest ranges, while GBP was able to post decent ranges. As such, trading in GBP pairs may be the better choice today.
Relative Strength Grid
Comment: The strongest trends are in USD (bullish), NZD (bearish), EUR (bearish). The strongest momentum was seen yesterday in EUR (bearish), JPY (bearish).