FX Flows

From the FXWW Chatroom: All eyes on China. Yes, China Q4 GDP grew 1.6% over the quarter and 6.9% over the year. Big echoes through media and social network – saying China grew the slowest in 25 years! Is it really that bad? Initially, the equity markets didn’t think so. SHCOMP went from +0.4% to +0.56% after release. 

Things turnaround, equity indices pared gains – Nikkei went into red. Why? Fact is risk is still off. One interesting comment by the Chinese head of NBS that the slowdown in property and stock markets had impact on the 2015 economy. 

Into late morning, China stocks made a comeback. SHCOMP from flat to +1.62%. 

15:35:21

Market is so focussed on China and you just go with it. UsdJpy started the day bid, noticed demand linked to AudJpy. UsdJpy reached the day’s peak after China GDP 117.71 then slipped back on weak Nikkei 225. UsdJpy offers are said to be planted ahead of 118.00 while usual talk semi-official buying under 117.10. 

At beginning AudJpy buying saw AudUsd printing 0.6893 but turn around in equity pushed the AudUsd to 0.6840’s. Offers were mentioned at 0.6930-35, while corporate bids at 0.6800-20. 

The same goes for NzdUsd, the pair started off bid but ended lower on Jpy-cross selling 

15:35:25

EurUsd tracked the stock market. Offered at the start but reached 1.0904 when equity indices pared gains. 

Canadian dollar tracked closely to price of oil futures and we think that will stay for now. There are bids below 1.45-handle; definitely market is short Cad. Times ran an article about OPEC saying they have defeated shale revolution. In that report, OPEC said “The analysis indicates that 2016 will be a supply-driven market. It will also be the year when the rebalancing process starts.” “The analysis indicates that 2016 will be a supply-driven market. It will also be the year when the rebalancing process starts.” If you recall, PM Justin Trudeau said lower Cad and low oil prices have damaged large parts of the economy. 

I would be very careful. 

Asians 
Chinese 2015 GDP growth took the centre-stage. If you recall, Premier Li Keqiang at the opening of AIIB, said Chinese economy grew near 7% in 2015. There you have it. 

USDCNY fixed at 6.5596, little change from yesterday’s 6.5590. Both Spot and forward points are stable. 

Hkd took another beating – reaching high of 7.8091. Plenty of bets of UsdHkd blowout but I think this is lottery ticket bet. Remember, HKMA bought loads of Usd at 7.7500. 

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