MNI China Daily Summary: Friday, September 6

MNI BRIEF: China To Address Consumption In Next Five-year Plan

MNI: PBOC Net Injects CNY111.4 Bln via OMO Friday

CHINA PBOC CONDUCTS CNY141.5 BLN VIA 7-DAY REVERSE REPOS FRI

MNI: PBOC Sets Yuan Parity Lower At 7.0925 Fri; +2.94% Y/Y

CHINA SETS YUAN CENTRAL PARITY AT 7.0925 FRI VS 7.0989

MNI: EUROZONE Q2 GDP +0.2% Q/Q, +0.6% Y/Y

MNI: FRANCE JUL INDUSTRIAL PRODUCTION -0.5% M/M, -2.2% Y/Y

MNI: GERMANY JUL EXPORTS +1.7% M/M; IMPORTS +5.4% M/M

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AUSTRALIA: Albanese Lines Up Budget for May Election

UK: Week Ahead

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OPTIONS: Markets Isolate Funding Currencies for NFP Reaction

OPTIONS
BulletMarketsForeign Exchange Bullets
  • Markets have isolated funding currencies as carrying the greatest NFP-tied risk into the data today, with options trades adding the most notable vol premium for JPY and CHF relative to all other currencies in G10.
  • This further reinforces the view that today's NFP print will prove critical for rate expectations and could spur the next phase of strength for CHF and JPY - with assumed Fed rate cuts and the subsequent tightening of rate differentials a key driver this year.  
  • Vol markets added an overnight premium of over 13 points for USD/JPY and over 10 points for USD/CHF for options rolling off at today's cut, blowing out the implied break-evens across both pairs. USD/JPY prices a near 150 pip swing on today's data, close to three times the YTD average for a routine session.
  • This raises the focus on the bear trigger and key support at 141.70, with December 2023's low just below at 140.25. That said, rates markets are clearly primed for more significant reaction in case of a hawkish surprise today, meaning 144.64, the 50% retracement for the downleg off the Sep03 high should be considered.
  • NFP Preview here: https://media.marketnews.com/USNFP_Sep2024_Preview_156b327b83.pdf
  • Rates markets set-up here: https://marketnews.com/us-tsys-stir-hawkish-nfp-outcome-poses-greatest-risk-to-market-positioning

 

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  • Markets have isolated funding currencies as carrying the greatest NFP-tied risk into the data today, with options trades adding the most notable vol premium for JPY and CHF relative to all other currencies in G10.
  • This further reinforces the view that today's NFP print will prove critical for rate expectations and could spur the next phase of strength for CHF and JPY - with assumed Fed rate cuts and the subsequent tightening of rate differentials a key driver this year.  
  • Vol markets added an overnight premium of over 13 points for USD/JPY and over 10 points for USD/CHF for options rolling off at today's cut, blowing out the implied break-evens across both pairs. USD/JPY prices a near 150 pip swing on today's data, close to three times the YTD average for a routine session.
  • This raises the focus on the bear trigger and key support at 141.70, with December 2023's low just below at 140.25. That said, rates markets are clearly primed for more significant reaction in case of a hawkish surprise today, meaning 144.64, the 50% retracement for the downleg off the Sep03 high should be considered.
  • NFP Preview here: https://media.marketnews.com/USNFP_Sep2024_Preview_156b327b83.pdf
  • Rates markets set-up here: https://marketnews.com/us-tsys-stir-hawkish-nfp-outcome-poses-greatest-risk-to-market-positioning