The euro headed for its seventh weekly decline in eight as PMI data out of the euro area's two largest economies increased the chances of a big interest-rate cut by the European Central Bank next month.
EUR/USD dives by 1.3% to 1.0335, lowest since Nov. 2022, before paring losses; huge stop entries went through on the breaks of 1.0440, 1.0400 and 1.0350 as digital options exposure kicks in, Europe-based traders say.
Euro heads for its worst three-day decline since Sept. 2022; there's no strong technical support until Fibonacci level of $1.0201.
Euro-area business activity unexpectedly shrank in November, a sign of the damage being wrought by political chaos and heightened discord over trade.
The market-implied odds of a half-point rate cut next month by the ECB jumped to 50%, from about 15% on Thursday.
Volatility rallies across the board with euro gauges leading gains; one-week EUR/USD implied vol up by 147 basis points to 9.80%, highest since Nov. 6.
Front-end of euro's term structure plays catch up with the back-end, one-month vol approaches pre US-election levels.
Risk reversals on the tenor at 109 basis points, puts over calls, richer by around 45 basis points this week.
The dollar strengthens against its Group-of-10 peers as signs of escalation in the war in Ukraine fueled demand for haven assets.
The Bloomberg Dollar Spot Index rallies by 0.7% to fresh cycle highs, before losing traction somewhat; it's set for an eighth straight weekly advance.
New Zealand's dollar declined to a two-year low against the Australian currency as positioning ahead of next week's RBNZ meeting tripped key technical levels.
AUD/NZD rises as much as 0.6% to 1.1180, the highest since October 2022, before paring most gains.
Momentum buy-stops were triggered above the July peak, according to an Asia-based FX trader. Overnight-indexed swaps indicated it's certain the Reserve Bank of New Zealand will cut its policy rate by 50 basis points on Nov. 27, with a 24% chance of a 75 basis points reduction.
USD/JPY little changed at 154.46; it declined as much as 0.4% earlier after data showed consumer prices excluding fresh food and energy in Japan rose more than economists estimated in October, adding to speculation of a Bank of Japan rate hike in December.
GBP/USD falls 0.8% to 1.2494, lowest since May; the UK private sector slipped from solid growth to stagnation after the budget as a closely-watched survey showed firms gave a "clear thumbs down" to UK Chancellor Rachel Reeves' fiscal plans.
Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren't authorized to speak publicly.
Source : Bloomberg
