From the FXWW Chatroom: Moore defeated Strange in the Alabama primary, not good for Trump although he did try to distant himself. Slight Usd weakness on that, initially.

Kicked off the day with some of Trump’s tax framework coming out on Bloomberg headlines. There was an article in Washington Post, which my trader Jon said was prime reason UsdJpy traded up to 112.54. The article said President Trump praised China for helping to reign on North Korea and he appeared to reflect an attempt at lowering the temperature after days of heated rhetoric and threats from both sides. Usd positive was met with fixing supply, UsdJpy returned to 112.40 then Alabama primary had the UsdJpy printing 112.28.

The 200-Day SMA comes in at 112.08, bids are mentioned at 111.80 and also 111.50. Topside resistance 112.50, more at 112.72. Today’s spot value is Sept 29, which is the last business day for month, quarter and Japanese half fiscal year-end. I was told there are dividend payments today for Japanese firms and not small. However, my colleague Haru said investors have hedged this and will have minimal influence. He said he is more focussed on Abe’s new policies.

We encountered good EurUsd bids on the platform 1.1780-85 but cleared them at the open and traded down to 1.1777. Alabama headline put the high at 1.1795. We expect offers to come in around 1.1810 and more atop 1.1825. Intraday support is at 1.1750. There are some 1.1800 option strikes maturing coming days amounting to more than Eur2bn. On Oct 3, there are about Eur1.9bn worth of option rolling off 1.1770-75.

Not a lot in Aussie and the Kiwi. AudUsd got to 0.7888 on back of Alabama and at same time, China published the Aug industrial profits. Back to 0.7871 last morning on AudNzd sales.

Over in New Zealand, shorts covered in NzdUsd ahead of tomorrow’s RBNZ. Both Labour and National have reached out to NZ First to say they’re ready to talk when Peters is ready. Peters told reporters that he will wait till Oct 7, when special votes are in.

UsdCad first moved higher, some said it was due to the report that US will be slapping a 220% tariff on sales of a new Bombardier Inc. jetliner to US airlines. Ouch! UsdCad peaked 1.2370 then slide back to 1.2350. Bank of Canada Governor Stephen Poloz will be speaking today, 11.45 am ET. Our macro strategist Bipan expects the same sentiment expressed by Tim Lane (that the Bank is watching the exchange rate).

Emerging Market

USDCNH slipped from 6.6325 to 6.6277 following the CNY fix. The rate came in at 6.6192, which was outside the estimated range of 6.6205-6.6390. PBOC also skipped OMO this morning, said liquidity in the banking system is relatively high. China Aug industrial profits jumped 24% from 16.5%, very strong number, highest since Aug 2013. Despite the fix, onshore USDCNY was bid after the open on CFETS. Believed to be month-end Usd demand had the onshore spot revisiting 6.6400.

Bank of Thailand interest rate decision at 2.05 pm Bangkok, most experts calling unchanged at 1.5% but last 1.5 weeks, market is speculating a cut. In my opinion, the answer is no. Why is the UsdThb back up here? Market went long Thb thinking the central bank won’t be able to hold the UsdThb, some were pre-funding for BOT bill issuances and last ones were Sept 25/26. Now with no issuances and Fed hiking in Dec, short covering mainly from offshore, we saw US name buying from 33.21.

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