30 June 2016 at 11:36 GMT
- US Initial Jobless Claims (267K exp.) (1230 GMT)
- CA April GDP (1.4% y/y exp.) (1230 GMT)
- US June Chicago Purchasing Manager (51.0 exp.) (1345 GMT)
- Federal Reserve's James Bullard to speak (1730 GMT)
EURUSD is higher on the day, supported by inline or better CPI figures in Eurozone, and better unemployment figures in Germany. The close of day above 1.1100 yesterday gives a new support area, which should be quite decent given it is 200-day moving average at 1.1096. Next tech resistance is the 1.1170 (50% Fibo from high/lows of June 24). Then 1.1225 being around the 100-day moving average. USDJPY continues threatening the 103.08 area that we have been seeing as the main tech resistance. The more it hovers around this level, the more we might be seeing it as a threat of breaking this level. On the downside 102.40 is starting to show some tech support, around the lows of today and the highs of June 27, then the 101.50 weekly 50% Fibo level from the rally starting week Sep 10, 2012, and also the 101.10 area. GBP had been knocking again on the 1.3500 tech resistance level that has been solid so far today but took an immediate slide after Johnson pulled from the Conservative party leadership race. If this slide proves temporary, a resistance level maybe to consider is the 1.3533 area as the next level from the highs of yesterday. After that, the interesting level is at the 1.3660 area (which would close the gap from the opening this week) but we still wait to fully assimilate the fallout from Johnson's withdrawal. The way the market is behaving is as if any activation of Article 50 is not in the near horizon. Care still very much needed both ways.
FX Options volatilities
The general selloff of options, as part of the risk on in the market is continuing, but there are still some buyers of front end GBP stuff for the beginning of next week. Vols in the emerging-market space is continuing to trade lower too and so too are risk reversals. The exception is USDCNH, as the People's Bank of China says it is willing to let USDCNH move to 6.80 in 2016. It is not, however, the PBoC's decision alone. Spot moved from 6.6650 to 6.7050 before settling — risk reversals and at-the-money smalls have moved higher. AUDUSD dropped from 0.7415 to 0.7380. Metals were lower overnight for gold to slide to $1,300/oz quickly in the market. In USDJPY, risk reversals are trading smalls lower, but there is interest to buy USD call for the next Bank of Japan meeting.
The Brexit relief continues although with more modest gains for corporate bonds today – still there is a 50-basis-points gap to close compared to pre-vote levels. Eurozone yields are a little firmer but are still performing relatively well in light of the stronger sentiment all around. We still think there is potential, especially in UK bonds, and have just released a new trade view, which you can found on TradingFloor.com.
European markets took a breath first thing and opened lower with oil also showing weakness. Equities then reversed from their lows to turn positive by mid-morning. EuroStoxx 600 is up 0.25% on lower volume than recently seen. Automobiles and retailers lower on the day whilst utilities and energy stocks perform the best.
US Federal Reserve banking stress tests showed that subsidiaries of Deutsche Bank and Santander failed again on weaknesses to their capital planning. They are both trading lower by over 1%.
UniCredit fell nearly 5% after the open before news broke of the upcoming announcement of Jean-Paul Mustier as their new CEO. Shares sharply rose post the news and currently trade up 1.5%.
Weir Group confirmed that its COO will step down. HSBC said the company is unlikely to be significantly impacted by the EU referendum vote and raised their price target. The stock is trading up over 5%.
Monsanto has asked Bayer to increase its takeover offer. Bayer shares were lower on the news but since recovered to being small positive.
Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.
He came, he saw, he completely bottled it. Photo: iStock
— Edited by Martin O'Rourke