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US TSY FUTURES

Extending Sell-Off

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Huge 5Y Put Buyer

SHORT-STERLING OPTIONS

Call spread vs put

SOY TECHS

(X1) Consolidation Mode

US TSY FUTURES

10Y Call Unwind

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Cable has pushed back above $1.3900 into London trade, with the USD moving away from firmest levels of the session, although broader FX trade remains limited. The rate last deals 5 pips higher on the day at ~$1.3910.

  • This comes after the rate broke out of its narrow range into Friday's WMR fixing, as USD demand became evident over the final fixing of the month. The rate subsequently bottomed at $1.3888 during late NY trade. The cross showed just below Friday's low in Asia-Pac dealing ($1.3887 was registered), before edging away from worst levels, although it stuck to a narrow 24-pip range.
  • Continued questions surrounding international COVID travel restrictions (including some dissent from within the ruling Conservative Party), the potential for COVID vaccine booster shots and mixed Tory party views on several key fiscal matters (in addition to some headwinds for support for PM Johnson within the party, per the latest opinion polls) dominated local UK weekend news flow.
  • There are no FX option expiries of note for the pair to be concerned with at today's 10AM NY cut.
  • With the rate above the 50-day EMA bulls now look to the 61.8% retracement of the Jul 1 - Jul 20 sell-off ($1.3990). Above there, key short-term resistance is located at the June 23 high ($1.4001). Initial support is located at the 20-day EMA.
  • The final manufacturing PMI release headlines the local docket on Monday. Further afield, Thursday's BoE monetary policy decision will garner most of the week's attention re: GBP dynamics. While the Bank is expected to leave its headline monetary policy settings unchanged, the MPC vote split re: the Bank's Gilt purchase target will be eyed, given the recent gaps that have become evident within the Committee.