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Late SOFR/Eurodollar/Treasury Option Roundup

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EURGBP Continues Bearish Grind Lower, JPY Consolidates Losses

  • Despite the more optimistic price action across equity markets on Friday, the greenback has held onto gains with the USD index (+0.25%) extending on the prior day’s recovery. 111.135 resistance has held for now and the index has moderated a little ahead of the close.
  • The Bank of Japan rate decision came and went with little surprise, with Governor Kuroda doubling down on policy by stating that markets should not expect rate hikes or an exit from easy policy anytime soon. The JPY was the weakest G10 currency on Friday, helping put USD/JPY back around Y147.50, where price action consolidated for much of the US session.
  • GBP has outperformed its major counterparts as markets continue to factor in a more benign political/fiscal backdrop in the UK under a Sunak government. GBP most notable in the crosses with GBPJPY advancing 1.22% as well as EURGBP continuing its grind lower throughout the week.
  • A short-term bear threat remains present for EURGBP following the strong reversal from 0.9266, Sep 26 high, resulting in the break of a number of key short-term support levels and this suggests scope for an extension lower near-term with sights on 0.8559 next, a Fibonacci retracement. Key short-term resistance has been defined at 0.8867.
  • Worth noting the daylight-saving time shift for the Uk and Europe over the weekend which will affect the time difference for US data and especially the Fed decision on Wednesday. The November FOMC meeting appears mainly about the message the Fed wants to send about its plans for December.
  • Other central bank decisions for Australia and the UK underpin a busy week that culminates in the release of October US non-farm payrolls.

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