FxWirePro: Eurozone inflation still lacklustre – Indexed linked and sovereign derivatives

Apr 21, 2017 11:47 am UTC| Research & Analysis Insights & Views

Euro area inflation breakeven has undergone a recent correction, but we like to fade this move in the near term, given the chances of a risk-friendly environment and higher inflation in April. We favor IOTA trades in core...

FxWirePro: Long-term risk reversals softened for sterling on better odds on EU-UK trade pact – Rosy time for option writers to use interim rallies and short vols

Apr 21, 2017 10:44 am UTC| Research & Analysis Insights & Views

Do you think GBPUSD is the worst behind us? Are Brexit negotiations better prospects? Prime Minister May surprised the market by calling for a snap general election on 8 June. The possibility of a hard Brexit has...

FxWirePro: Trivial elevation to GBP forecast on better macro and Brexit developments but bearish still linger - Shorting downside and volatility via seagull

Apr 21, 2017 10:09 am UTC| Research & Analysis Insights & Views

GBP has performed better over the past month than we had expected. The trade-weighted index looked to be breaking down in March on evidence of a broader economic slowdown but has since rallied 2% on a combination of better...

FxWirePro: Faltering reflation trade slips up dollar

Apr 21, 2017 07:11 am UTC| Central Banks Insights & Views Economy

Faltering US inflation expectations have emboldened the market to mark down its expectations of the Fed rate path. This has robbed the dollar of yield support. Absent a shock result in the French election, the euro should...

FxWirePro: EUR/JPY mounting hedging sentiments in major downtrend – Add vega longs in put back spreads as RR and IVs highest among G7 space

Apr 21, 2017 06:59 am UTC| Research & Analysis Insights & Views

As the delta risk reversals of euro crosses (especially in EURJPY) have shown a mounting bearish interest as the progressive increase in negative numbers signify the traction for hedging sentiments for further downside...

FxWirePro: Low yielding vols lure long vega in USD/CHF and delta hedges

Apr 20, 2017 13:09 pm UTC| Research & Analysis Insights & Views

One sticking point is that 5Y USDCHF forwards is realizing 1.5-1.8 pts. below 5Y ATMs. This is not a direct impediment to vol buying since gamma contribution to long-expiry option P/Ls is minuscule, but the implied ...

FxWirePro: Glimpse over vigilant of crude inventories and use credit call spreads to arrest WTI short term bearish and mid-term bullish risks

Apr 20, 2017 12:36 pm UTC| Research & Analysis Insights & Views

Crude stocks drew for a second straight week, falling by 1.0 Mb (vs. -1.4 Mb expected). Cushing stocks fell, too, by 0.8 Mb (vs. +0.2 Mb expected). Refinery runs continued to ramp up quickly, and 4w av. runs are 395 kb/d...