European Data Dominates Pre-NY, Focus To Switch To U.S. Data As Volume Picks Up

The BBDXY trades around the middle of its session range, a touch below unchanged level.

• Cross-market feedthrough (yields and equity market swings) surrounding marks higher in the final Eurozone services PMI print, and as markets adjusted to the run of state German CPI data ahead of today’s national print, dominated in early London trade.
• Volume wise, desks point to pre-NY interbank volume that is roughly 30-40% above the recent norms, recovering after a sub-par Asia-Pac session turnover-wise.
• The same desks have highlighted interest to the sell the USD on the part of levered names, although they believe that conviction remains relatively low during early ’24.
• The impending run of U.S. data takes focus from here, with FOMC-dated OIS showing ~144bp of cuts through ’24 at typing, comfortably off the pre-Christmas dovish extreme of 160-165bp as the early rounds of ’24 trade see a slight moderation in the degree of cuts priced into the major global STIR strips.