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On January 29th, traders are using options to bet that European Central Bank (ECB) policymakers will unexpectedly implement a 25-basis-point interest rate cut sometime this year, a move that could yield up to 12 times the initial investment. Several large bets have already been executed this week using options strategies linked to the three-month Eurozone interbank lending rate (Euribor). If the ECB ultimately cuts rates, these positions could potentially generate a total profit of €32 million (approximately $38.3 million), 12 times the initial investment. This contrarian move is noteworthy because the market had previously widely expected the ECB to keep interest rates stable this year. Although the central bank is expected to hold rates steady at next weeks meeting, policymakers are now having to consider the surge in the euros exchange rate, which has sparked discussions about the possibility of further easing.Kremlin: Zelensky has not responded to Russia’s repeated invitations to negotiate.On January 29th, Intang Intelligent Control announced that it expects its net profit for 2025 to be between RMB 23 million and RMB 28 million, a year-on-year decrease of 53.55%-61.84%. With the development of emerging technologies such as 5G, AI, and cloud computing, the demand for memory chips continues to rise, resulting in a significant increase in the companys memory business compared to the same period last year, with overall operating revenue increasing by approximately 4.5% year-on-year. However, due to industry competition, the gross profit margin of electronic component distribution products is under pressure, and the companys gross profit margin has decreased by approximately 0.7 percentage points year-on-year. Meanwhile, during the reporting period, the company increased its R&D investment in chip design and manufacturing, with overall R&D expenses increasing by approximately 65% year-on-year, leading to a decrease in net profit attributable to shareholders of the listed company compared to the same period last year.According to Interfax news agency, the Kremlin stated that Russia has once again invited Ukrainian President Zelensky to Moscow for negotiations.On January 29th, Morgan Stanley analysts pointed out that the European Central Bank (ECB) may respond to the recent strength of the euro when it announces its policy decision on February 5th. The ECB is expected to keep interest rates unchanged as anticipated, but the euros continued strength since the December meeting may prompt the central bank to pay more attention to its exchange rate strength and its impact on curbing inflation. This could fuel market expectations of another rate cut this year. Given that the market is currently pricing in a low probability of further rate cuts, this could play a key role in restraining the euros rise.

Below 0.6350, AUD/USD draws bids; the downside is preferred before US CPI

Alina Haynes

Oct 10, 2022 11:30

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The AUD/USD pair has risen after dropping below immediate support near 0.6350 during the Asian session. Given that the market attitude is still unfavorable, the asset's outlook does not appear positive. The S&P 500 fell into a trance as a result of Friday's positive US Nonfarm Payrolls (NFP) numbers, which extended the US dollar index's (DXY) recovery.

 

At 112.88, the DXY in Tokyo has eclipsed the previous week's high and is expected to continue to rise as hawkish Federal Reserve (Fed) policy bets soar. The US NFP came in at 263k on Friday, more than the 250k forecast. Due to this, there is now a higher chance that interest rates will rise for a fourth consecutive time by 75 basis points (bps). A healthy labor market and stronger economic fundamentals are always required for the central bank to safely announce rate increases.

 

Rates have increased as the likelihood of a 75 basis point rate increase has increased. The yield on the US 10-year Treasury bond reached 3.9% and increased for four straight days.

 

Investors' attention will then turn to the publication of US Consumer Price Index (CPI) data on Thursday. Preliminary predictions indicate that headline inflation will drop from 8.5% to 8.1%. The core CPI, which does not include prices for food and energy, will rise from 6.3% to 6.5%. The Federal Reserve's decision to raise interest rates seems to be having little impact, but the drop in gas prices has started to have an impact on the headline inflation rate.

 

The consumer inflation expectations statistics are expected to be released later this week, according to the Australian bulls. The economic statistics are projected to increase to 5.8% from the previous report's 5.4%. This could encourage the Reserve Bank of Australia to act (RBA). The Official Cash Rate (OCR) was raised by 25 basis points to 2.6% by Reserve Bank of Australia (RBA) Governor Philip Lowe, and he plans to continue raising it until it reaches the desired level of 3.0%.

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