• EUR/USD flat in holiday-thinned trade, firmer oil adds to euro headwinds

• Oil jumps more than 2% on U.S.-Iran tit-for-tat strikes , keeping EU gas prices near YTD highs

• Through the terms-of-trade channel, rising energy costs increase downside risks for EUR

• Fed Sept hike odds now around 60% , supporting USD bid

• Near-term support at 1.1550-60, break would open up 1.1500

• Resistance at 1.1600-05, then 1.1630-50
EURUSD hourly chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Aug 31 (Reuters) - Foreign exchange option expiries for the New York cut at 10.00 a.m New York (1500 GMT) can, under certain conditions have an impact on currency spot prices.

For Monday's EUR/USD expiries there are strikes totalling EUR10.45 billion between 1.1600 and 1.1690. These deals are likely to impact the spot price.

Gamma hedging is a major driver when traders who are short of options often hedge their exposure in spot. As spot moves closer to key strikes near the expiry time, hedging flows can increase and become one-sided (buying if market is below a big strike, selling if above), which can influence spot.

Market conditions that can heavily influence the impact of option expiries include the following. The notional size of the expiry if large relative to typical market liquidity in that pair and the time of day. Strikes that are near the current spot (at or very near-the-money into the cut), especially if there are several clustered strikes. If dealer positioning is skewed (the street is generally short gamma), so many players need to hedge in the same direction and if liquidity is thinner (e.g., around data, holidays, or in less-liquid currency crosses), so hedging flows have a greater impact.

Spot traders will look for patterns that can appear ahead of option expiries.

Magnet effect: If there's a large expiry, at or very near spot, the price sometimes gravitates toward that strike into the cut as hedgers adjust.

Volatility spike / mean reversion: Short-gamma hedgers may buy high and sell low as spot moves, which can add noise and short-term volatility. Long-gamma players can have the opposite, dampening effect.

Fade after the cut: Once the options expire and hedging flows stop, the market can "relax", and any artificial pressure around a strike may fade.

Option expiries, if strikes are large can impact spot but not always, and usually only when certain conditions are met.

EUR/USD option expiries for Monday's New York cut, August 31
EUR/USD option expiries:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10-am New York/1400 GMT on Monday 31 August

• EUR/USD: 1.1450-60 (310M), 1.1500-05 (420M), 1.1550-60 (574M)

• 1.1600-10 (4.0BLN), 1.1615-25 (1.83BLN), 1.1650-60 (1.2BLN)

• 1.1665-75 (2.22BLN), 1.1680-90 (1.2BLN)

• USD/JPY: 159.00 (2.1BLN), 159.35-40 (273M), 159.50 (620M)

• 159.65-70 (2.7BLN), 160.00 (306M), 161.00 (953M). EUR/JPY: 184.87 (200M)

• USD/CHF: 0.8090 (236M), 0.810 (356M). EUR/CHF: 0.9375 (408M)

• 0.9380 (227M)

• GBP/USD: 1.3445-50 (457M), 1.3530 (257M)

• AUD/USD: 0.7045-50 (447M), 0.7120-25 (709M), 0.7140-50 (491M)

• 0.7210-20 (381M),

• USD/CAD: 1.4050 (207M)(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.15% in Asia as broader USD index fades from Fri 92.72 highs

• Trump claims Kharg Island under attack, clarification not yet forthcoming

• Iran targets U.S. bases in Jordan, retaliating for strikes on Larak Island

• Fed Chair Warsh says more work to be done on inflation, firms Fed hike bets

• AUD needs break of 0.7210 to resume uptrend, may slip toward 0.7102 21-DMA

• AUD Q2 current account due Tue, Q2 real GDP due Wed (poll +0.3% q/q)

• Range Asia 0.71515-705 support 0.6920 0.6866, resistance 0.7210 0.7282
DXY Daily 55-DMA


AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks fall as much as 4.7%, their biggest intraday pct loss since July 24

• Sub-index hits its lowest level since Aug 20

• Gold prices fell more than 3% on Friday after U.S. Federal Reserve Chair Kevin Warsh's signalled interest rate that hikes may be needed [GOL/]

• Shares of Northern Star Resources and Evolution Mining fall 4.1% and 4.3%, respectively

• Seperately, NST said Deputy CEO Ryan Gurner will leave the gold miner

• YTD, AXGD up 4.2%

(Reporting by Nichiket Sunil in Bengaluru)

• AUD/USD +0.1% Mon as DXY softens slightly from Fri's Warsh induced highs

• Iran targets bases in Jordan, retaliating for U.S. attacks on Larak Island

• Firming Fed rate hike bets likely to prevent USD from bigger downside swing

• AUD needs break of 0.7210 to resume uptrend, may slip toward 0.7101 21-DMA

• AUD Q2 current account due Tue, Q2 real GDP due Wed (poll +0.3% q/q)

• Range Asia 0.71515-641 support 0.6920 0.6866, resistance 0.7210 0.7282
AUD Daily 21/100/200-DMA


DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• A more hawkish than thought FOMC Chair Warsh at Jackson Hole, Fed Sept hike?

• Any September Fed hike would deem a BOJ hike neutral

• JGB-US rate diffs little changed however, 2s @252, 10s 174 bps, tad lower

• USD up across the board, USD/JPY to 160 handle, Asia so far 160.05-20 EBS

• Middle East conflict re-flaring too, USD supportive too

• Technically, USD/JPY still below 161.14-162.59 ascending daily Ichi cloud

• Cloud to plunge going forward however, to 159.59 towards weekend

• Spot for now in area of flat 100-DMA at 160.00, recently seen range top

• Japanese exporter sales likely good early as has been recent pattern

• Support likely from area of hourly Ichimoku tenkan currently at 159.77

• Intervention possibility but seen small on Bessent talk

• Bessent doesn't see yen moves as "disorderly", moves "pretty contained"

• G20 coming up but maybe no help from US on intervention front now

• Fibo 61.8% retracement of 163.99 to 155.20 July 28 to August 3 at 160.63

• Option expiries today 159.50-70 $3.3 bln, some at 160.00, 161.00 $953 mln

• IMM CTAs look to have upped yen shorts in latest reporting week

• Related comments , , , also

• US markets , , ,

• On Bessent-talk , , Warsh ,
USD/JPY:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Bitcoin tumbles to $77,066 in Asia Monday, tipping lower

• Falls out of Bollinger uptrend channel, below Fibo $78,774

• Bullish indicators nullified, long capitulation to ensue

• Nearest chart support is 21 DMA, substantially lower at $71,894

• USD recovery inspired by Fed's Warsh weighs on crypto

• Warsh signals rate tightening to address inflation
BTC

(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.7% from Fri 0.7208 high in aftermath of Fed Chair Warsh speech

• Warsh asserts retention of 2% inflation target, says more work to be done

• Broad USD index & UST yields higher on firming Fed rate hike bets

• AUD fails to consolidate break above 0.7200, reforms resistance 0.7210

• Futures imply 56.1% probability of Sep RBA hike, will lend AUD support

• AUD Q2 current account due Tue, Q2 real GDP due Wed (poll +0.3% q/q)

• Range early Asia 0.71515-62 support 0.6920 0.6866, resistance 0.7210 0.7282
AUD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD net spec G10 long pared by $7.93bn in Aug 18-25 IMM period; $IDX -0.74% in period

• Today's post-Warsh USD rise likely moots data as Fed narrative flips to less-dovish

• EUR$ +0.86% in period; specs +22.7k contracts now -36.4k; ECB hawkish, Fed dovish in period

• $JPY -0.24%; specs -10.4k contracts now -63.3k; questions around BoJ policy USD supportive

• GBP$ +0.89%; specs +10k contracts now -44.5k; again dovish Fed view weighed on USD

• $CAD -0.36%; specs +36.6k contracts now -122k; rate convergence early in period lifted CAD

• CAD short still significant, likely added to after hawkish Warsh; keep focused on glbl inflation

• AUD$ +1.13%; specs -296 contracts now -44.5k; higher terminal RBA policy tack supports AUD

IMM Position Table as of Aug 25:


Majors w/IMM Performance Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

(Fed hike odds updated)

• EUR/USD slipped back to retest 1.16 post-Warsh

• Inflation fight not over message lifted Fed hike bets

• Sept hike odds now around 56%, but outcome remains depend on data/oil dependent

• Spot back at pre-Treasury buyback level (1.1603), a break below leaves EUR vulnerable to deeper retracement

• Next downside objective would be last week's low at 1.1557 on a 1.1600 break
EURUSD hourly chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

ING Research previews next week's RBNZ policy meeting.

"We expect the Reserve Bank of New Zealand to increase its overnight cash rate (OCR) by 25bp to 2.75% on 2 September. When rates were last hiked in July, the RBNZ said that “some further reduction in monetary stimulus is likely to be required”. In its May projections, based on higher oil price assumptions, signalled rates could reach 3.0% by year-end and remain there throughout 2027.

Markets are currently matching those projections for 2026, but are even more hawkish for 2027, despite lower energy prices. A September hike is fully priced, with another expected by year-end. Beyond that, the OIS curve implies a further 50bp of tightening, taking rates to 3.50% by mid-2027," ING notes.

"Against this backdrop, we see scope for dovish risks heading into the meeting. The bar for the RBNZ to validate the market's aggressive tightening expectations appears high.For FX, we see downside risks for the NZD around this meeting, given the high hurdle for the RBNZ to validate market pricing," ING adds.

USD/JPY bulls remained in command after Fed Governor Kevin Warsh struck an upbeat tone on the U.S. economy and warned that inflation has remained elevated for too long.

The pair climbed to a post-intervention high above 160 amid broad-based dollar strength, extending a bull channel from the intervention low near 155.20.

Further gains are possible if investors rebuild dollar longs and yen shorts after August's position trimming. Weekly CFTC data show leveraged funds have begun cautiously adding short-yen exposure as volatility declines. However, yen futures open interest has dropped to its lowest level since April, suggesting bearish conviction remains limited.

Intervention concerns could re-emerge if USD/JPY remains above the 160 psychological level and approaches its 160.34 upper Bollinger and 160.63 cloud bottom as upward momentum builds.

For now, however, option convexity sees only modest intervention risk despite next week's G20 meeting involving Japan Finance Minister Satsuki Katayama, U.S. Treasury Secretary Scott Bessent and BOJ Governor Kazuo Ueda.

While past intervention episodes have often coincided with major policy events such as the G20, the yen may be more focused on equity performance and upcoming U.S. payrolls and CPI reports, along with mid-September Fed and BOJ meetings. On the downside, a break below 159.60, followed by the 21-day moving average at 158.84, would temper the bullish outlook with a close below a flat 200-day moving average at 158.41 inviting bears.
Yen


(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

CIBC Research reviews Fed Warsh's remarks at Jackson Hole.

"It’s ironic after a speech in which the Fed Chair decried forward guidance, markets took his remarks as signaling a higher probability of rate hikes ahead. Certainly, if this speech had come from any one of his recent predecessors, that would have been a reasonable conclusion to draw from the final segment of his Jackson Hole remarks. In that section, Warsh effectively downplayed any of the items that might have been raised to bolster the case for remaining on pause. On the growth side of the ledger, he didn’t focus on higher long term bond yields and mortgage rates and concluded that financial markets are not restrictive, and similarly showed no concern about slower net hiring, focusing on the low jobless rate. On inflation, he dismissed the importance of some recently slower monthly core CPI and PCE prints, rightly noted that slower wage growth often failed to steer inflation, and argued that stable inflation expectations could disappear in a hurry. That said, at the end of his speech, he opted to reiterate that these words don’t tell you about what he’ll opt to do, saying “I stand before you committed to a discipline, not a decision.”  CIBC notes.

"The reality is that he could have given this exact same speech just ahead of the July meeting, since nearly all of the points he raised would have been equally valid then. The only real change is that oil prices have headed higher, and if there’s a sign of a turn in the other direction for fuel costs before year end, the FOMC could stay in its watchful waiting stance," CIBC adds.

• GBP$ lower after Fed Chief's J-Hole comments, -0.47% at 1.3532 in early NorAm

• Warsh says Fed has 'work to do' if above-target inflation persists

• Warsh notes lack of recent progress on lowering inflation

• Says Fed needs market signals as 'unfiltered' as possible

• LSEG's IRPR now sees Fed Sept hike odds at 52%, was near 40% pre-Warsh

• USD Index +0.4%, U.S. equities lower post-Warsh but not considerably lower

• GBP$ supt tested at 21-DMA by 1.3537, close below puts 30-DMA at 1.3484 in view

• Bears gaining control while below the 10-DMA by 1.3597, 200-DMA a likely target

GBP$ Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

ANZ Research discusses AUD/USD outlook fot the coming week.

"We have revised our RBA call and now expect a 25bp hike in November, with a clear risk of an earlier move as a 1.0% q/q trimmed mean print in Q3 now looks more likely than 0.9%. The upside risks flagged in August are therefore closer to crystallising. The RBA left the cash rate unchanged at 4.35% on 11 August in a unanimous decision, while Governor Bullock kept the door open to further tightening if inflation risks build. The domestic calendar is light into month-end, leaving the AUD more exposed to offshore drivers," ANZ notes.

"Jackson Hole on 27–29 August is the key event, with Warsh's keynote in focus. A non-committal or dovish tone could extend the AUD/USD's rally toward 0.72 and then the year-to-date high near 0.7280, while a hawkish surprise would likely cap gains near term, with downside probably limited to around 0.7120. We retain a constructive near-term bias on hawkish RBA repricing, with Jackson Hole the main swing factor and dips toward 0.71 likely to attract buyers unless the USD receives a hawkish surprise," ANZ adds.

• EUR/USD flat ahead of Fed Chair Warsh's speech at Jackson Hole (1400GMT)

• Though spot has been in a holding pattern since rejecting 1.1700 on the topside

• Headwinds are growing for EUR, as European nat gas prices grind higher

• At current levels this would argue that EUR/USD belongs closer to 1.1400, not mid-1.16s

• That said, the recent lift in EUR/USD has been more about the pullback in the dollar than genuine EUR strength

• Given the backdrop, fading any fresh topside from above 1.17 than chasing weakness looks the cleaner expression

• Resistance sits at 1.1700-10, then 1.1790-1.1800. Support: 1.1640-50, then 1.1615-34
EURUSD vs nat gas


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• Cable remains below 1.36 before Warsh's Jackson Hole speech at 1400 GMT

• 1.3580-1.3597 is Friday range-to-date. 1.3571-1.3602 was Thursday range

• GBP/USD was on 1.36 handle before hotter than expected U.S. PCE data Wednesday

• Three Fed officials issued inflation warnings at Jackson Hole on Thursday

• Next Fed rate decision is on September 16, day before next BoE rate verdict

• Pound can bank on another 6-3 rate hold vote in September

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Yen has surrendered part of its intervention-driven gains, set for a monthly drop

• USD/JPY has risen from 159.30 to 159.65, on Friday, EBS data shows

• It could be set for a sustained break above the August 18 159.78 peak, buy stops likely above

• That would unmask 160.63 Fibo, a 61.8% retrace of the 163.99 to 155.20 (July to August) fall

• USD/JPY and EUR/JPY tend to move in tandem, log correlations are high above +0.5

• Financial markets are focusing on whether Katayama and Ueda will meet Bessent next week

Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Traders are betting $8.5 billion that euro drops

• EUR/USD has risen since specs sold short

• Pair rising from 1.1353 on Jul 28 to 1.1711 on Aug 21

• Rise followed by a shallow dip to 1.1637 on Aug 27

• The 200-DMA at 1.1634 is underpinning EUR/USD

• Bullish cross (21-DMA at 1.1589 above 100-DMA at 1.1573)

• Crowded dollar longs set to shape Jackson Hole market reaction

•
EURUSD


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable has traded a 14.5 pip range thus far Friday; 1.35825-1.3597

• Those parameters are within Thursday's 1.3571-1.3602 range

• 1.3571 is low since August 19 (when USD fell on U.S. bond buyback gambit)

• Dollar may react to Jackson Hole speech from Warsh at 1400 GMT

• Three Fed officials issue inflation warnings at Jackson Hole

• 1.3548 and 1.3525 (August 19 low) are GBP/USD support levels under 1.3571

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10am New York/15:00 GMT on Friday August 28

• EUR/USD: 1.1495–1.1500 (651M), 1.1550–1.1555 (369M), 1.1560–1.1565 (277M), 1.1570–1.1575 (700M), 1.1580–1.1585 (307M)

• EUR/USD: 1.1600–1.1605 (842M), 1.1625–1.1630 (845M), 1.1640–1.1645 (373M), 1.1650 (1,148M), 1.1680–1.1685 (956M)

• EUR/USD: 1.1700 (277M), 1.1725–1.1730 (901M), 1.1750–1.1755 (488M), 1.1770 (205M), 1.1900 (252M), 1.2150–1.2155 (374M)

• USD/JPY: 158.00 (302M), 158.15–158.34 (1.499B), 158.40–158.44 (420M), 158.50 (217M), 159.00 (216M), 159.50 (423M), 159.95–160.00 (205M)

• USD/JPY: 160.45–160.50 (344M), 160.69 (276M), 161.00 (665M), 161.10 (441M), 162.09 (271M), 162.50 (310M), 163.00 (1.447B)

• EUR/JPY: 167.00 (450M), 170.00 (1.076B), 175.00 (900M), 178.00 (700M), 179.00 (200M), 188.00 (400M), 193.00 (400M)

• GBP/USD: 1.3225 (282M), 1.3400 (210M), 1.3470 (281M), 1.3610 (279M), 1.3700 (832M)

• USD/CHF: 0.8000 (1,542M), 0.8150 (201M)

• AUD/USD: 0.7000 (746M), 0.7125 (394M), 0.7175 (251M)

• USD/CAD: 1.3545 (260M), 1.3650 (200M), 1.3750 (317M), 1.3825 (240M), 1.3870-1.3875 (682M), 1.3900 (269M), 1.3995 (360M)

• USD/CAD: 1.4030 (250M), 1.4305 (276M), 1.4335 (359M), 1.4450 (294M)
(Martin Miller is a Reuters market analyst. The views expressed are his own)

• AUD/USD breaks above key 0.7200 technical resistance in Asia, +0.45% wtd

• Firming RBA hike bets pushes pair towards 0.72825 last traded Jun 3, 2022

• Futures pricing now implies 53.7% probability of RBA 25 bps hike in Sep

• Fed Chair Warsh speech at Jackson Hole Fri looms as pivotal event Fri

• Fed officials Schmid, Goolsbee, & Hammack state concern on U.S. inflation

• Range Asia 0.71855-0.7204 support 0.6920 0.6866, resistance 0.7200 0.7277-82
AUD Weekly 52-WMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• GBP/USD steady in Asia as markets brace for key risk events

• Warsh's keynote address Fri, Aug 31-Sep 1 G20 finance meeting in focus

• Fed chair speaks at 1400 GMT(10AM NYT),traders seek clarity on rates outlook

• Investors await clues on how Fed plans to tackle sticky U.S. inflation

• Uncertainty on future policy path risks further damage to Fed credibility

• Support 1.3550-55, 1.3525-30, resistance 1.3620-25, 1.3645-50, 1.3675

• Ranges: Thursday 1.3571-1.3602, Asia 1.3589-1.3597
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)