08 June 2016 at 11:22 GMT
Today's session sees the European Central Bank launch its landmark bond-buying programme just as 10-year bund yields touch their lowest-ever level. Equities have retraced Tuesday's gains following mixed Chinese data and a forecast revision from the World Bank (negative, of course).
Precious metals, unsurprisingly, are picking up steam as the "global slowdown/stillborn rate hike/Brexit/total hysteria" narrative gains ground, while crude oil is also moving higher on news of new Nigerian disruptions and expectations of a decline in US inventories to be confirmed by today's report at 1430 GMT.
Sterling remains in a holding pattern, but continues to show signs of nervousness (read: total hysteria) with regard to polling data.
- US MBA Mortgage applications (1100 GMT)
- CA May Housing Starts (1215 GMT)
- US April JOLTS Job Openings (1400 GMT)
- US Weekly DOE Crude Oil inventories (1430 GMT)
EURUSD: The momentum higher has stalled and yesterday we closed a whisker higher than Monday. Going into the Brexit referendum we might see upside breakouts limited. The range is also tightening with today at only a 25 pip range. Still watching 1.1390 as main tech resistance and 1.1398 (highs of April 21), and then we have 1.1417 – the Fibo level we mentioned yesterday, and after that Fibo level of 1.1493. The tech support of mention lies around 1.1307 (today's 55-day moving average) and 1.1294 (Fibo Level from the decline May 3). USDJPY: Could not make it above 107.80 yesterday and indices are lower on the day today and we are approaching tech support at 106.93. Expecting a rangebound movement around these levels so far. GBP: No new polls of any weight so far, but will remain poll-sensitive. GBPUSD tested the 1.45 area that we have been looking at lately and rejected it quickly this morning, while EURGBP resting right above the 100-day moving average at 0.7801. Medium-term moving averages (21- and 55-day) are showing a range of 1.4519 to 1.4410 respectively in GBPUSD and 0.7746 and 0.7845 in EURGBP, so are these the ranges GBPUSD and EURGBP are comfortable in the current poll situation. Commodity currencies: AUDUSD is approaching key tech resistance at around 0.7477 (55-day moving average) to 0.7490 (50% Fibo level from the drop in AUDUSD on April 22). We expect the rally to fade between here and the 0.7570 area (61% Fibo level). First tech support around 0.7408 (38% Fibo with the 100-day moving average at 0.7377 being the level that started the rally following poor nonfarm payrolls last Friday).
FX Options volatilities
JPY: ATM volatility a little higher from yesterday mainly due to lower spot. Risk reversal and butterfly is lower today.
GBP: ATM volatility lower today.
EURUSD: Volatility slightly better bid.
AUDUSD: Volatility continues to trade offered. Buying interest is still seen for 16-17 June.
NZDUSD: bid for o/n as RBNZ meeting this eve else market is offered for volatility medium term.
Overall, EURUSD volatility looks as a relatively cheap Brexit hedge compared to prices for GBP risk.
ECB starts corporate bond-buying programme today. German 10-year bunds yield touched the lowest level on record at 0.035%.
European stock markets fell this morning, retracing two straight days of gains which had taken the major indices back to their 2016 highs.
Mixed data from China overnight and the World Bank cutting its forecasts triggered some profit-taking.
The benchmark index of the top 600 stocks in Europe fell 0.6% while the only real notable corporate news came from Erste, which is down 3% today after insurance company Uniqa said it would sell approximately 17.4 million Erste shares.
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Trading the Brexit vote?
Brexit is dominating everything. Photo: iStock
— Edited by Martin O'Rourke and Michael McKenna