Another 4 day week…..?
Yet again, we have an extremely slow Monday with ranges tight, and flows light across the board.
Clearly “Weekend Gamma” remains in demand, and understandably so. However, it continues to make for a complete washout on the Monday.
Expect flows and volatility to pick up today, but we could well have to remain patient until after expiries today.
Similarly, overnight little to report in terms of flow or movement, although AUDUSD did see a short sharp move lower after RBA. We saw several sellers in quick succession after the 30 tick drop to 1.0680-90, then a decent buyer at the same level.
Perhaps no surprise then, that AUDUSD has done little since the initial move.
Sentiments & Views
– At the risk of sounding like a broken record, EURUSD remains in a constructive bullish pattern. Buying dips, lightening on rallies has worked extremely well over the past 3 weeks, and see no reason to alter this approach just yet.
HOWEVER, we are approaching levels where risk/reward could well switch, favouring a sell rallies, lighten on dips approach.
– CHF remains very much in favour. Good demand for USDCHF and EURCHF saw CHF weaken a little during the European session, before rallying back strongly in New York afternoon. Swiss CPI today is likely to be a the key event of the morning.
– GBP very much taking a backseat again. Little data around to ignite any interest, so expect it to remain a “follower” for the time being.
– Remain bearish JPY. Continue to see shorts increase and continue to see little official action or comment. Both of which give me cause to remain playing JPY from the short side.
– AUDUSD remains rangebound despite RBA. Gamma, the probable culprit, making this a high probablity for a post expiry move today.
Core
– EURUSD Bullish. Continue to buy dips, lighten on rallies.
– JPY Bearish. Long small GBPJPY, USDJPY and EURJPY.
– GBP Neutral.
– AUDUSD cautiously bearish and short after RBA, but prepared to be patient.
– CHF is all about the CPI this morning. Talk of a stronger number this morning, but we go in to the data square.
UBS Investment Bank