CIBC FX Flows: FXWW

From the FXWW Chatroom: Our session started with USDJPY selling right after 7.00 am JST, at the same time USDTRY popped to all-time high, 4.8450. This led us to suspect Japanese retail were behind the TRYJPY liquidation. Small relief after the headline about Trump and new tax cuts but didn’t last long. Tokyo-based banks sold USDJPY, Nikkei fell more than 1% and UST yields pared gains. Some said the uncertainty of Trump/Kim is causing some risk off. USDJPY tripped over stops under 110.50 to print 110.425.
For today’s option expiry we have 111.00 strike for $1.5bn, 110.00 for $2bn. FWIW, there were fair amount of 111.00 option strikes bought last 12 hours, expiring next week.
A story in FT that the Chinese authorities are cutting import duties on cars sold into China. Announced on Tuesday, Ministry of Finance said the duties will be cut to 15% on July 1, while duties on imported auto parts will fall from 10% to 6%. FT noted that while this move is to avert a trade war between US/China, it is a boost for German carmakers and this comes ahead of Chancellor Merkel’s meeting in Beijing on Thursday.
EURJPY sold on risk off, EURUSD backed off towards 1.1756. Just a reminder, there is about EUR1.1bn of 1.1785 and a EUR1.25bn of 1.1750 option strikes maturing today.
GBP, AUD and NZD weakened on JPY cross selling. Weak stops under 1.3420 were taken out. Slightly weaker commodity priced led USDCAD to 1.2858. Flows have been rather light.
Asia and Emerging Markets
The Turkish Lira took another hit this morning following, in what we believe, liquidation of long TRYJPY cross. The USDTRY was settling around 4.67 but at the turn of the clock 7.00 am JST, the pair traded very quickly to 4.8450, historical high.

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