US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Stock Futures Dip as Investors Await Key Payrolls Data 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Japan Economy Minister Downplays Inflation Risks Despite BOJ Warning 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
China Holds Loan Prime Rates Steady for 14th Month as Economic Recovery Remains Uneven 
Japan PM Sanae Takaichi Unveils Growth Plan as BOJ Independence Concerns Lift Bond Yields 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
We have woken up this morning unsurprised by the Fed decision and the market response; indeed, the policymakers’ median forecast is now fully aligned with our call that there would be three further hikes in 2018, followed by another two in 2019. We don’t expect the Fed to change its tone or direction appreciably under the incoming Chair Powell.
As the ECB edges towards normalization, an undervalued euro has room to rise further, the tide of positioning (long euros) and yield differentials (still heavily in the dollar’s favor) is against the euro. The upshot is that progress from current levels towards ‘fair value’ somewhere closer to EURUSD 1.30, will be choppy and slow. EURUSD likely to gradually increase and reach the 1.23 level by the mid-year point. Tech is the sector with the highest exposure to international revenue, so a weaker dollar would be a tailwind. Moreover, the powerful worldwide tech cycle may not be dead yet and NASDAQ could surprise more on the upside.
The historically low level of volatility makes call premia cheap and the negative correlation between NDX and EURUSD dramatically enhances that cheapness. The recent leg down in the index is an interesting entry point into the trade.
The S&P500 could reach 2800 early next year on approval of tax reform and so is the case with NDX – increase exposure to this theme.
As a result, we advocate buying NDX Call 6-month 102.5% contingent on EURUSD above 1.235 for 0.85% – 77% discount to vanilla (3.7% for a 6-month 45Delta call) (References: NDX 6394pt, EURUSD 1.1818).
Risks: only the premium is at risk if the NDX ends up below its strike AND the EURUSD is not above its barrier at expiry.
Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards 57 levels (which is bullish). Hourly USD spot index was at shy above -113 (bearish) while articulating (at 11:57 GMT).
For more details on the index, please refer below weblink:
http://www.fxwirepro.com/currencyindex
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