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January 14th - A growing number of options traders are ruling out a 2026 Federal Reserve rate cut and instead betting that the Fed will keep rates unchanged throughout the year. This trend can be traced back to at least last Friday, when US employment data showed an unexpected drop in the unemployment rate. Market pricing suggests this virtually eliminated the possibility of a Fed rate cut this month, prompting more traders to postpone their expectations for rate cuts in the coming months. David Robin, interest rate strategist at TJM Institutional Services, noted, "From a data perspective, the probability of the Fed keeping rates unchanged until at least March has increased, and the likelihood of stable rates increases with each meeting." Recent options flows for the covered overnight funding rate, which is closely linked to the Feds short-term benchmark rate, have sent a more hawkish signal. New options positions are primarily concentrated in March and June contracts to hedge against a continued delay in the Feds next rate cut. Other positions targeting longer-term contracts are expected to profit from the Feds stance of keeping rates unchanged throughout the year. Robin stated that regardless of whether the market believes the Fed will hold rates steady, these trades are low-cost, and as a prudent risk manager, you would want to hold these positions.On January 14th, according to futures market news: 1. WTI crude oil futures trading volume was 1,698,750 lots, an increase of 633,450 lots from the previous trading day. Open interest was 2,018,272 lots, an increase of 19,747 lots from the previous trading day. 2. Brent crude oil futures trading volume was 322,400 lots, an increase of 118,072 lots from the previous trading day. Open interest was 231,565 lots, an increase of 869 lots from the previous trading day. 3. Natural gas futures trading volume was 620,866 lots, a decrease of 256,129 lots from the previous trading day. Open interest was 1,635,714 lots, a decrease of 7,021 lots from the previous trading day.ECB Governing Council member Kazak: The uncertainty and risks of nonlinear shocks remain high, and the outlook faces risks from two aspects.ECB Governing Council member Kazak: The ECB is currently in a good position.ECB Governing Council member Kazak: The Fed’s actions are worrying.

European Open: Reality Check for Risk as China Data Misses

Cory Russell

May 17, 2022 10:43

Indices from Asia:

The ASX 200 index in Australia increased by 18.3 points (0.26 percent) to 7,093.40.


The Nikkei 225 index in Japan has gained 167.78 points (0.63 percent) and now trades at 26,595.43.


The Hang Seng index in Hong Kong has dropped 73.65 points (0.37%) and is now trading at 19,825.12.


China's A50 Index is presently trading at 13,144.84, down -151.19 points (-1.14 percent).


UK and Europe: FTSE 100 futures in the UK are now down -25 points (-0.34%), with the cash market expected to open at 7,393.15 points.


Futures on the Euro STOXX 50 are now down -13 points (-0.35%), with the cash market expected to open at 3,690.42.


The DAX futures in Germany are now down -40 points (-0.29%), with the cash market expected to open at 13,987.93.


Futures in the United States are now down -128 points (-0.4 percent )


Futures on the S&P 500 are now down 69 points (-0.56 percent )


Futures for the Nasdaq 100 are now down -21 points (-0.52 percent )


Form of data To say the least, China today was unimpressive. Because of the lockdowns, we knew it wouldn't be wonderful, yet retail sales, industrial production, output, and investment all fell in lockstep, while the unemployment rate climbed. This dampened mood in the area, with copper reversing early gains and Chinese shares, as well as the AUD/JPY and US futures, trading down.


The fact that there is a light at the end of the tunnel for lockdowns has helped to lessen the pain. Shanghai declared over the weekend that restaurants, stores, and shopping centers will be allowed to return today, and then disclosed that the goal date for reopening is June 1st.


Commodity currencies were once again lower, continuing a trend that began last week. The yen stepped up to the safe-haven plate and even outperformed the US dollar, with USD/JPY shattering a major hourly trendline.


While prices hit resistance around the 100-hour eMA, a bearish divergence emerged on the stochastic oscillator, and the trendline break revealed a rising wedge pattern is in action, targeting the lows at 127.50. For the time being, we'd like to fade into weakness below the 129.50 resistance zone, with the 128.30 support zone serving as a stop-loss.


On Friday, the FTSE 100 had its best day in two months as risk assets rallied ahead of the weekend. It started at the day's low and finished slightly below its 20-day eMA, just off the high.


Despite the day's gloomy end, the stochastic oscillator issued a buy signal on Wednesday. However, a false breach of 7200 on that day signified a swing low ahead of Friday's rebound, which saw it close above the 200-day eMA as well.


We'd like to look for dips inside Friday's range from here, particularly if prices can stay above the 7340–7350 support zone. If that's the case, 7500 is a good intermediate goal before 7600, while a break (or hourly close) below the 200-day eMA at 7269 invalidates our bullish stance.

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