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FOREX: EUR/USD on Cusp of Resuming Underlying Uptrend

FOREX
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  • EUR/USD has cleared the Friday high ahead of the NY crossover, with prices now sitting just below the 1.1214 level. A break above this level would mark a resumption of the primary uptrend which is shrugging off both increased speculation of a possible October ECB cut as well as Germany's flagging growth (evident in that last report that official growth expectations are to be revised lower to 0.0% from 0.3% for this year).
  • The single currency trigger was aided higher by German regional CPIs which, while soft, don't match the sizeable downside surprises in Spanish, French releases last week. ECB pricing for the October decision has retraced in tandem, with this morning's 22bps rate cut pricing reversing to 19bps at the NY crossover.
  • JPY is the poorest performer in G10. We noted USD/JPY upside was the dominant theme overnight, with just over $3 in calls trading for every $2 in puts Monday. Y142.50 call strikes have seen over $1bln notional in interest, despite the modest fade lower to pullback lows of 141.65 at the European open.
  • Focus ahead turns to the MNI Chicago PMI release for September (seen at 46.0 from 46.1 prior) as well as the prelim German CPI stats after this morning's regionals. The central bank speaker slate should prove of more interest, with ECB's Lagarde appearing in front of parliament, Fed's Powell in front of the NABE (text and Q&A expected) as well as Fed's Bowman and BoE's Greene after the US close.
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  • EUR/USD has cleared the Friday high ahead of the NY crossover, with prices now sitting just below the 1.1214 level. A break above this level would mark a resumption of the primary uptrend which is shrugging off both increased speculation of a possible October ECB cut as well as Germany's flagging growth (evident in that last report that official growth expectations are to be revised lower to 0.0% from 0.3% for this year).
  • The single currency trigger was aided higher by German regional CPIs which, while soft, don't match the sizeable downside surprises in Spanish, French releases last week. ECB pricing for the October decision has retraced in tandem, with this morning's 22bps rate cut pricing reversing to 19bps at the NY crossover.
  • JPY is the poorest performer in G10. We noted USD/JPY upside was the dominant theme overnight, with just over $3 in calls trading for every $2 in puts Monday. Y142.50 call strikes have seen over $1bln notional in interest, despite the modest fade lower to pullback lows of 141.65 at the European open.
  • Focus ahead turns to the MNI Chicago PMI release for September (seen at 46.0 from 46.1 prior) as well as the prelim German CPI stats after this morning's regionals. The central bank speaker slate should prove of more interest, with ECB's Lagarde appearing in front of parliament, Fed's Powell in front of the NABE (text and Q&A expected) as well as Fed's Bowman and BoE's Greene after the US close.