FX Flows

From the FXWW Chatroom: Asia witnessed a slow session with US market closed today. 

The UsdCad, ended Toronto at 1.4535, had another wild move this morning. It was paid at 1.4554 and one way up to 1.4650. We saw a US name paying offers through 1.4600 – doubt it was stops. UsdCad reversed back to 1.45-handle; into mid-morning, the pair was back to where Toronto closed. Bounce in oil futures had the UsdCad into 1.45-teens. 

Despite equities in negative, EurUsd feels heavy and UsdJpy, AudUsd, NzdUsd are bid. 

We think speculative names, anticipating a weak Nikkei, caused UsdJpy to print 116.56. Nikkei did open weak, fell more than 1.9%, but started to recover and helped prop up the UsdJpy. There was also a rumour of semi-official names bidding UsdJpy at 116.50. 

AudUsd, NzdUsd firmer as risk returned. Shanghai Composite opened down 1.8% and started to pare losses. We think at some point it was the RRR news that got the SHCOMP recovering. 

USDCNH kicked off the week at 6.6025 and as soon as Asia settled down, the pair backed off below this 6.5900, low 6.5865 – said to be on back of this PBOC RRR story. 

PBOC confirmed that the new RRR rules on offshore Yuan will take effect on Jan 25. PBOC said the RRR  will be raised from zero to “normal levels” for offshore yuan clearing banks. 

Good demand in both 1’s NDP UsdPhp and UsdInr this morning – our trader Gary said these buying are linked to systematic funds. UsdPhp closed Friday at 48.02, traded up to 48.07. 

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