MNI China Daily Summary: Thursday, December 12

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Demand for Downside via Options Compounds Spot Weakness

EUR
  • EUR downside persists, with EUR/USD tipped to new lows of 1.0922 at typing. The moves are seemingly on decent volumes, with EUR futures activity around 35% ahead of average for this point in the session. This follows a decent session for volumes yesterday also, where Z3 EUR futures saw ~30% higher daily cumulative volumes that the rolling average.
  • Today's weakness could spell a pause in the EUR uptrend after the five consecutive sessions of higher highs, with softer French and Dutch inflation prints knocking implied ECB pricing across '24. Next support undercuts at 1.0991/1.0915, but seen stronger into the 1.0817 200-dma.
  • Moves in spot echoed in options market activity: downside hedges are in solid demand, with close to $4 in puts trading for every $1 in calls so far Thursday, as 1.09 put strikes draw particular focus - although decent downside demand noted as low as 1.0450 in the pair.
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