CIBC

Key Headlines

  • Bounce in the US equity futures, optimism is back, Moderna could have a COVID-19 booster shot targeting the omicron variant tested and ready to file for US authorization as soon as March.

FX Flows

$Yen advanced towards 113.00, I thought it was demand for the Tokyo fix but it wasn’t. Apparent buying came from the retail day traders, putting on long USD positions. Exporters capped the $Yen at 113.00 but gave way. There is also talks of large 113.00 option strikes due on Friday for $1.05bn.

Risk sentiment pushed €Yen higher thus helped the EUR$. There is a chatter from overnight that offers above 1.1350, I was told some of them came from IMM-type of accounts, probably trying to reduce longs. Policy divergence between Fed and ECB, leveraged accounts will be looking to sell on rally, real money guys are buying dips. I suspect bids should come in around 1.1290.

Not an exciting session for the A$ and N$. Australia’s October trade surplus at A$11.22bn, pretty much in line with forecasts. However, exports fell -3% against estimates of -1%; imports -3% against +2% and iron ore exports fell 26.8%. 2-year yield spreads of AU-NZ bonds widened, at one point rose about 123 bps but no reaction in the cross.

Citi

European Open

It seems like the market is getting a breather this Thursday morning in what could be the eye of the storm. Following the first case of the Omicron variant being identified in the US yesterday, markets had taken a huge risk-off swing, with equities down sharply and UST rallying sharply. Asset markets staged a partial rebound during Asia hours with Treasury yields higher by 3-4bps across the curve and S&P e-minis climbing 0.6%. In keeping with these moves, JPY was down slightly, while oil prices were up over 1%. NOK was a notable exception to the rule, however, ticking lower as a result of flows. EM mostly saw capital flows driving the currencies, with our eTraders seeing volumes a tad lower through the day.

Looking forward to today’s events - the OPEC+ meeting presents the largest event risk, with a consensus expecting a variation from the planned 400k bpd increase. We also see some US data in the form of Initial Jobless Claims & Continuing Claims at 13:30 GMT. Fedspeak will be in the limelight as usual ahead of the blackout. We see Bostic at 13:30 GMT, Quarles (departing thoughts) at 16:00 GMT, Bostic again at 16:30 GMT and we end with Daly and Barkin at 16:30 GMT. HUF will see a live central bank meeting, in which the market expects a 15bps hike to 3.05%, while BRL sights GDP data at 12:00 GMT.