On Thursday we also expect the ECB to drop its interest rate easing bias as it prepares for a taper decision in September. We think Pres. Draghi will avoid a hawkish tone however by emphasising that a “substantial degree of accommodation” will be maintained.
In Australia, strong Q1 inventory data added further momentum to AUD following soft US payrolls Friday. UBS Economics still expects Q1 GDP on Wednesday to grow 0.2% q/q, but now with risks skewed to the upside. For the RBA tomorrow we expect no major changes in tone. (UBS)
USD selling vs JPY/CHF/Gold post NFP – Light week for G10 FX flow, slight better USD buying bias most of the week but saw USD selling post Friday’s NFP data vs JPY/CHF/Gold from HF.
GBP downside on poll data – Significant buying of GBP put options, mostly HF after polls started to tighten.
EUR topside closing, ECB offered and FED bid – EURUSD general theme was for closing of topside structures and a clear divergence of views on ECB and FED events, with the former offered but the latter in demand.
Overall clients still adding little risk and avoiding premium outlay – Partly due to generally low returns 2017 to date. Interest for AUDNZD downside in response to the spot price action, but still all front end options. (UBS)