CIBC FX Flows: FXWW

From the FXWW Chatroom: Will you dare to buy on this weakness? Price action was clear, risk off at the start, JPY crosses got hammered, but did not break new lows.
USDJPY under pressure, ever since we got to 108.115, this pair has not resurfaced above 108.80. Will we get a chance with UST yields recovering? The problem here is EURJPY, felt like someone has been thumping this pair consistently. There are option strikes at 108.00 and 109.00 rolling off today, $850 on downside, $1.3bn on top.
My colleague walked in and was shocked to see the 10-year UST yields, he asked what happened and I replied risk off cos of Italy. He said what has that got to do with US? I don’t think he is wrong but I do think we are getting complacent. David Smith in The Times said he will stick to his view that Italy will not leave the Euro. But this will be one rollercoaster ride. I like the article from MarketWatch, an opinion piece that Italy’s troubles aren’t the first time. The article said this Italian crisis could be a buying opportunity.
Market obviously not reading that, we got fooled on Monday and not today. This EUR is heavy. The pair now targets 1.1500, I know there is a barrier there but no further details. Offers are at 1.1590-1.1600, smaller ones surround 1.1550. On data front, German retail sales followed by French Q1 GDP.
Meanwhile, another storm brewing in Madrid, PM Mariano Rajoy to face a no-confidence vote this Friday, he survived one last year, should be okay this year.
AUDUSD dipped to 0.7477 on back of AUDJPY sales, we had a pop to 0.7509 after the building approvals but I don’t think that was the real cause of it. Someone mentioned gamma play because of option strikes maturing tomorrow between 0.7490 to 0.7530 amounting to more than AUD3.8bn.
Asia and EM
USD/Asian stayed elevated – USDTWD returned to 30-handle; USDPHP 12-year high.
US President Trump at Republican campaign rally in Nashville said in the end, Mexico will have to pay for the wall. President Enrique Peña Nieto tweeted, no way – signing it “Sincerely, Mexico (all of us)”
USDMXN unchanged.
USDCNH printed high 6.4325 at the Asia open, we suspect stop loss orders above 6.4300 were taken out. As soon as that was over, we drifted lower.
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