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Fundamental Archives |
Written by Saxo Bank |
Sep 08 10 08:25 GMT
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Volatility Returns, If Not Breifly
Before I get into the overnight nonsense, I can tell you that we're seeing a decent amount of action already this morning in the Cable and EURUSD, with the USDCHF also looking rather lively. In the Cable outside of stops being taken out through the 1.5430 level the market has also caught wind of Vodafone having sold its stake in China Mobile and having to repatriate around 70% of the proceeds which loosely speaking translates to around 3bio Sterling needed to be purchased, this was clearly enough to get the Cable even higher printing 1.5490 or so this morning. Tom prefers (in his frantic state) to fade this rally looking more at the economic fundamentals which not only were confirmed overnight with rubbish Halifax housing data, but also ahead of manufacturing data out a little later this morning. Looks like the market is bidding into this release with a buy the rumor, sell the fact trade…
On the EURUSD equally interesting, there is significant talk now for the second day of large (2bio) option expiries tomorrow at the 1.2600 strike, more fuel has been added to this fire with even Asia getting involved and now buying the overnight both direct and in the brokers market with strikes around the same level. Clearly the market knows something here and 1.2730/50 on the day might prove a difficult task to get through.
The USDCHF is once again printing this year's fresh lows just below the 1.0065 level with 1.0070 being the line in the sand with a conclusive break here opening the road to parity and beyond. Keep a keen eye on this one folks, it could indeed get ugly…
On the data front we have as already mentioned the UK prints and later on CAD building permits and the BoC decision with accompanying statement. The market seems to have all but priced in a 25bp hike today, but for some vague reason (unclear to me) traders seem a little jittery ahead of the release and thus we see USDCAD higher for the time being.
There is enough going on today to keep punters interested, however a word of caution, it will be rather whippy so be careful.
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