We maintain a buy on dips stance – credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.
What's going on ?
Theme Comment
· EURUSD broke 1.45, but gold didn’t manage to break the 1006 mark for good. Stocks edged higher in the US session, but Asian markets are down around 1%.
· US Consumer Credit declined a record $21.6B in July (stocks actually rallied intraday on that news), but the Federal debt increased by $111.9B.
· We maintain a buy on dips stance – credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.
FX
EURUSD Buy dips down to 1.4470 for an extension of rally to 1.4580+.
USDJPY Look to sell rallies to the 92.60-70 area for a re-test of o/n lows near 92.0.
EURJPY Seen pivoting around 134.0. Res 134.50, suppt 133.50.
GBPUSD Seems we have more upside. Buy dips to 1.6470-80, stop below 1.6430 for 1.66.
AUDUSD 0.8580-90 crucial for further gains. Below targets 0.8450 else 0.8670+ beckons.
FX Options
EURUSD Vols traded much higher with 1 mth up 1 vol and risk reversals were bid. Market is looking for 1-2 mth 1.50s so we expect spot to continue climbing.
USDJPY Although front end saw some life, it still seems offered but back end is holding up well.
Should Dollar weakness push spot down towards 9100 we should see bigger jumps in vols.
AUDUSD Gamma turns bid with plenty of buyers in the front end. Risk reversals also saw some aggressive buying under 1wk which should keep spot from offered.
Equities
DAX Buy/Sell at the break of 5501/5456 targeting 5538/5419. S/L below/above 5476/5476.
FTSE Buy/Sell at the break of 4971/4925 targeting 5505/4895. S/L below/above 4955/4938.
S&P500 Buy/Sell at the break of 1027/1020 targeting 1033/1014. S/L below/above 1024/1022.
Futures
Gold Buy at the break of 1008 and target 1022. Stop below 1000.
Silver Buy on dips towards 16.50 and target 16.70. Stop below 16.60.
Oil Buy at the break of 71.80 and target 74. Stop below
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