The global risk tone is softer, with Asian equity markets lower this morning. UK PM Johnson yesterday confirmed to outline a “cautious and prudent” route out of lockdown for England on Monday. Media reports suggest that this could see schools re-open on 8th March, with the further easing of restrictions in four-week intervals and things being back to ‘broadly normal’ by July. However, PM Johnson said that easing would be data rather than date driven. The other parts of the UK will reveal their own lockdown plans.

There are no key UK data releases today. In the Eurozone, look for the European Commission consumer confidence reading for February to be unchanged from January at -15.5.Confidence actually fell last month, possibly due to reports that vaccine rollout in the EU has so far been disappointingly slow.

A busy day for US data covers a range of sectors. Housing activity has picked up sharply since last Spring’s restrictions were eased. However, expect housing starts to have fallen by 1.0% in January after a big rise in December. Similarly, the Philadelphia Fed manufacturing index may also have slipped in February after a large gain in January.

US weekly jobless claims have received a lot of attention of late given concerns that the rebound in the labour market has stalled. That was prompted by a fall in employment in December and a disappointingly small rebound in January. However, declines in initial claims in recent weeks have hinted that the situation may be improving, so it will be interesting to see if this has continued.

Bank of England policymaker Saunders is scheduled to speak at 11am. Past comments have suggested that he is one of the members of the Monetary Policy Committee that is potentially most in favour of a move to negative interest rates. So markets will be looking for any signs that his view may be changing.

Early Friday will see a number of UK data releases. The GfK’s consumer confidence measure is forecast to have posted a modest rise in February to -27 from -28 in January. However, that will still leave it well below pre-pandemic levels. In the near-term, consumer spending is constrained by the lockdown. Nevertheless, it is possible retail sales rose in January as the proportion of spending that is online continued to pick up. Finally, public finance data for January, which normally shows a monthly budget surplus as it includes ‘self-assessment’ tax revenues is expected to post a big deficit this year.

G10 FX Options Expiries for 10AM New York Cut

  • EUR/USD: $1.1800(E527mln), $1.1895-05(E859mln), $1.1940-41(E663mln), $1.2000-10(E2.0bln), $1.2050(E652mln), $1.2065-75(E1.1bln), $1.2080-85(E536mln), $1.2100(E1.3bln), $1.2125-35(E831mln), $1.2150-60(E811mln), $1.2200(E1.5bln), $1.2300(E910mln)
  • USD/JPY: Y104.50-70($826mln), Y104.95-00(E596mln), Y105.95-00($950mln), Y107.75($1bln)
  • GBP/USD: $1.3550-60(Gbp673mln)
  • EUR/GBP: Gbp0.8700(E546mln-EUR puts)
  • AUD/USD: $0.7400(A$1.2bln), $0.7575(A$851mln), $0.7700-10(A$674mln)
  • AUD/NZD: N$1.0735-40(A$720mln), N$1.0790(A$515mln), N$1.0820-30(A$769mln)
  • USD/CNY: Cny6.35($1.8bln), Cny6.45($1.1bln), Cny6.50($1.25bln)
  • USD/MXN: Mxn19.75($785mln), Mxn20.34-35($666mln)
  • USD/ZAR: Zar14.40-43($797mln)


Larger Option Pipeline

  • EUR/USD: Feb23 $1.2135-55(E2.0bln-EUR puts)
  • USD/JPY: Feb24 Y103.70-80($1.6bln), Y105.00(E1.2bln), Y105.65-80($2.5bln), Y107.00-05($1.0bln)
  • GBP/USD: Feb26 $1.3900(Gbp1.1bln)
  • EUR/GBP: Feb26 Gbp0.8750-65(E1.0bln-EUR puts)
  • AUD/USD: Feb24 $0.7865-75(A$1.4bln); Feb26 $0.7900(A$2.1bln)
  • USD/CAD: Feb24 C$1.2690-1.2700($1.1bln)
  • USD/CNY: Feb19 Cny6.37($1.3bln), Cny6.45($2.1bln)
  • USD/TRY: Feb25 Try7.00($955mln), 7.10($1.5bln), Try7.25($1.0bln)

Technical & Trade Views

EURUSD Bias: Bullish above 1.2050 targeting 1.2350

EURUSD From a technical and trading perspective, the closing breach of 1.21 and the descending trendline is a bullish development opening a retest of prior highs at 1.2350, only a move back through 1.2040 would suggest further consolidation

Flow reports suggest topside offers into the 1.2150 area and then after a brief weak period increasing into the 1.2180-1.2220 level with weak stops above the level and increasing on any push above the 1.2250 level with possible strong offers into the 1.2300 level Downside bids light through to the 1.2080 area and possible weak stops appearing through the level and opening the chance of a test to the 1.2000 level in the short term with stronger bids into the 1.1950.

GBPUSD Bias: Bullish above 1.3750 targeting 1.40

GBPUSD From a technical and trading perspective,look for profit taking pullback to test 1.3750 as support as this level attracts fresh demand bulls will target 1.40 next.

Flow reports suggest topside offers light through 1.3950 with stronger offers likely through the 1.4000 area and option related barriers to clear with weak stops on a strong break of the 1.4000 areas, light offers into the 1.4050 areas and increasing again into the 1.4100 level and offers then thinning out for further moves through the sentimental levels, downside bids light through to the 1.3850 area with weak bids continuing through to the 1.3800 level and weak stops appearing on a dip through the level to run into stronger bids through 1.3750.

USDJPY Bias: Bullish above 104.50 targeting 107

USDJPY From a technical and trading perspective, as 104.50 supports there is potential for a further squeeze higher to test offers towards 107. A loss of 103.50 would negate further upside and suggest a resumption of trend

Flow reports suggest topside offers around the 106.50 area and stronger offers through to the 107.00 areas with stronger stops through the level. Downside bids light through to the 105.00 level and weak stops light through the 104.80 area and then stronger bids likely to appear below the 104.50 areas and continuing into the 104.00 level.

AUDUSD Bias: Bullish above .7560 bullish targeting .8000

AUDUSD From a technical and trading perspective, as the major trendline support at .7560 now acts as support, look for target wave 5 upside objective towards .8000. A closing breach of .7730 of the internal descending trendline will encourage the bullish thesis.

Flow reports suggest offers through the 0.7800 area and then likely to see increasing offers through to the 0.7820 area before congestive offers then start kicking in on any move through the area into the 0.7850-60 areas. Downside bids light back through the 77 cents level and weak stops on a dip through the 0.7680 area and limited bids through to the 0.7620 level and increasing through to the 0.7580 level before stops appear.

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