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USD Index Subdued, Key 50-dma Support Underpins

FOREX
  • Amid muted newsflow and data releases, G10 FX trades well within recent ranges - keeping major pairs on their now well-trodden path. This has kept the USD Index underpinned, as the 50-dma support flagged earlier this week holds as the key downside level. The mark (at 103.949 today) successfully contained a pullback in prices earlier this month.
  • Similarly, GBP/USD trades inside the technical parameters of 1.2575 - 1.2684, leaving markets to tread water ahead of the economic releases later in the week including the Bernanke review of Bank of England forecasting due on Friday.
  • Spot gold is the standout in commodities space, as the precious metal crests at a new all-time high, buoyed by simmering geopolitical risk in the Middle-East and the break of key resistance en-route to 2359.33 this morning - record levels.
  • Front-end vols are well bid as contracts begin to capture the release of US CPI on Wednesday (an overnight option struck today expires 90 minutes after the data release). Overnight implied vols across G10 are touching new April highs, most notably in NZD and CAD, which also capture their respective central bank's rate decisions tomorrow.
  • Releases set for the duration of the Tuesday session include US NFIB Small Business Optimism data, with no central bank speakers due.

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