### POV: DON'T BET ON SUMMER MARKET LULL......>

FOREX: ### POV: DON'T BET ON SUMMER MARKET LULL AFTER NFP

-Volumes and liquidity in FX markets understandably dried up this week with the

Independence Day holiday leaving many players out of the market. Without the

run-up in USD/CNY option flow alongside the rallying spot rate, options volumes

would be tracking at their lowest levels in months. While trading activity may

be dimming, volatility isn't, with realised EUR/USD 1m vols topping implied for

well over a month as CNY volatility and imminent trade tariffs catch hedgers off

guard.

-The summer calendar is light, but not absent, of risk events: the Bank of

England's rate decision and QIR on August 2nd at which MNI's PINCH model

suggests a rate hike is 68% priced in. Further strength in UK data may force the

market to factor in higher rates. A re-pricing of GBP and UK yields would inject

further volatility into G10 FX this summer.

-The installation of US tariffs against Chinese imports has already dented

confidence measures in China and a shock to global trade remains a material

risk. Data confirming this will put an end to any hopes of quiet summer markets.