Australia Consumer Confidence Plunges as RBA Rate Hike Hits Households 
ECB May Stop Rate Hikes After December, Capital Economics Says 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Fed’s Hammack Says More Data Needed Before Next Rate Move 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Yen in Focus as BOJ, Fed Rate Hikes Reshape Currency Markets 
OKXICE Files for 24/7 Tokenized US Stock Trading 
Bitcoin Outflows From Binance Hit Three-Year High as Whales Accumulate 
Trump Demands Powell Resign Over Fed Renovation Cost Overruns 
Add as a preferred source on Google
Selling EURGBP vs EURJPY correlation swaps to exploit idiosyncratic GBP noise with positive carry.
Short EURGBP vs. EURJPY correlation in our view, the re-emergence of idiosyncratic UK policy risk as a GBP driver is a catalyst for de-coupling of EURGBP from other EUR-crosses in the weeks ahead.
The macro team notes that the collapse in the correlation between EURGBP and EURUSD, for instance, can be rationalized in part by the flip-flopping in monetary policy guidance from BoE as the data cycle has turned, partly by the long shadow cast by Brexit negotiations, and to some extent by a series of large M&A transactions.
The rest of Euro-bloc FX is likely subject to more systemic forces of ongoing dollar strength and/or renewed emphasis on European political risk (c.f. Italy), hence short correlation plays between EURGBP and other EUR-crosses can be a useful source of alpha, especially in the context of meaningful systematic returns from selling the broad universe of EUR-denominated corrs – refer 1st chart which is reproduced from a previous publication on the issue.
Within the Euro-bloc, EURGBP vs EURJPY correlations screen as the most compelling short at present. Current implied corrs 20 is nothing to write home about in a historical context but are a healthy 20-30 % pts. too high vis-à-vis trailing realized corrs (refer 2nd chart).
Additionally, if the ongoing weakness in EM intensifies, it is comforting to know that historical asymmetry is in favor of correlation sellers: EURGBP – EURJPY implied corrs have fallen by 12 % pts. on average across sizeable vol shock events over the past 15-yrs, without unpleasant tails even during the years of the EU debt-crisis fuelled broad Euro sell-offs.
We open a short 3M corr swap as a positive carry, vol spike resilient construct to monetize idiosyncratic GBP noise. Courtesy: JPM
Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at -88 levels (which is bearish), while GBP flashing at -97 (bearish), and hourly JPY spot index was at 71 (bullish) while articulating at (11:04 GMT). For more details on the index, please refer below weblink:
http://www.fxwirepro.com/currencyindex
FxWirePro launches Absolute Return Managed Program. For more details, visit:
