21 April 2017 at 11:25 GMT
Today's suite of European PMI data saw France, Germany, and the Eurozone beating expectations but the positive surprise has failed to support the euro as we head into the weekend's French election.
Across the Channel, the UK posted a disappointing retail sales figure (minus 1.8% versus minus 0.1% expected) that raises fresh questions about the UK economy's health as the country heads into its own election on June 8.
Meanwhile, we see the agricultural commodities index hitting new lows while European bourses struggle to find direction.
- CA Canada Monthly CPI (1230 GMT)
- US Existing Home Sales (1400 GMT)
- US Mnuchin Briefing on Trump financial services orders and memorandum (1500 GMT)
EURUSD: Eurozone manufacturing and services PMI rose, while Germany fell slightly from previous (but still came in ahead of forecasts). EURUSD dropped following this to day lows at the 1.0687 area, which is a whisker above the 21-day moving average. USDJPY: The yen trade sees a slight risk-off hitting Europe with indices in the red except the Dax. USDJPY has decent tech support around the 108.88 area. Latest Kuroda comments and US tax reform hopes could be what needed to see us above 110 if French elections are in line with benchmark expectations GBP: UK March retail sales fell 1.8% compared to minus 0.5% expected. GBPUSD started to decline prior to the release; cable has, however, found decent tech support this week at 1.2770 (tech resistance back around December 6, 2016), and GBPUSD is now finding this area difficult to breach. Higher US yields and the election in France might be putting a lid on GBP strength in addition to retail sales.
FX Options volatilities
Last minute gamma buying dominates this morning in EURUSD one-week to one-month. In JPY crosses, the market is thin and very wide so it seems most market makers have the position they want and now just waiting for a result.
One-month AUDJPY was given at 12.5 so now down 2% over three trading days; only EURJPY front-end stays high with one-week around 24.5 %. One-year EURJPY was last given at 10.55 (low since 2015 is 10.0 %), so the curve is very inverted.
Overnight EURUSD straddle on machines is very wide... 160/240 pips and EURJPY is the same at 250-335 pips.
Good amount of EURUSD 1.07 for expiry today., and not much interest in most commodity pairs.
European stocks struggled for direction on Friday, with France’s benchmark index sliding after a suspected terror attack in Paris just days ahead of the presidential election. Other European markets were largely flat in Friday’s trade. Germany’s Dax 30 index was up 0.03% while the FTSE 100 index rose 0.1%.
Shares of Software jumped 4.5% after the company reported a smaller-than-expected drop in underlying earnings.
WS Atkins rose 4.2% after SNC-Lavalin Group Inc. (SNC, -0.69%) said it will buy the UK engineering company for £2.1 billion ($2.69 billion).
Shares of German soccer club Borussia Dortmund GmbH & Co. KGaA added 2.2%. The gain came after police charged a Russian-German man with being behind the bomb attack on the Borussia Dortmund team bus last week, alleging he was hoping to make money on a drop in the stock price.
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Odds aside, nervous markets can't help but keep one eye on Paris. Photo: Shutterstock
— Edited by Michael McKenna