EUR/CHF, EUR/JPY flows - new France wides, Belgium >100, old-school JPY and CHF bids
CHF and JPY back in their 'traditional' safe haven roles
New France wides ahead of Moody's and Belgium widening
Euro pressures still having to express themselves through the crosses as long dollar positioning still props pairs, and current tech heaviness is finding better expression in the 'traditional' JPY and CHF bid avenues than USD too.
In JPY and CHF led action, EUR/CHF extends the retracement to close to 0.92 figure ahead of the 0.91~ May lows. EUR/JPY weighed back to the recent 176~ base ahead of much further substantial potential long-term retracement scope on a larger JPY reversal.
France meanwhile is seeing 10s drive through the recent peaks on to 167/8bp, with the dangers further out that this runaway train is ultimately accelerating to 200 if nothing steps in the way. Crisis-response-improvement-complacency (CRIC) has been the pattern of pretty much all these episodes, so the point of forced reaction always comes first.
Extension comes in anticipation of Friday’s latest Moody’s rating review and while price action already more than factors in a downgrade, a negative report would still add to negative news flow.
‘Reverse contagion’ also remains a big watch point. Belgium, also in the semi-core club, also seeing spreads to bunds breakout higher above 100bp and the ‘shape’ of the recent spread chart doesn’t look great on the chart.