FX Flows

From the FXWW Chatroom: Equity markets stayed soft; risk is off and plenty of babbling from officials.

NZ published the Jan Food Prices and the index rose 2% from -0.8%. This boosted Kiwi from 0.6717 to 0.6727 and later to 0.6740. RBA Stevens was upbeat when he addressed parliament; this helped AudNzd above 1.06-handle and handed Nzd back below 0.6720.

Risk-off after open, puts pressure on AudUsd and later knocking it off to 0.7100. Unlike other days when it is risk-off, AudNzd sold; but today the cross is in demand. Thus, Nzd forced to 0.6675.

Japan Finance Minister Taro Aso made some remarks on UsdJpy but declined to comment on intervention. The Nikkei fell on open, was down more than 4.3% during the first 15 minutes, causing UsdJpy 111.88. Japanese newswire reported that Japan PM Abe met with BOJ Kuroda at midday. Nikkei pared nearly more than half of losses after the break, UsdJpy popped to 112.96. Plenty of speculation about the rally in Nikkei – some said it was because MOF FX Chief Asakawa was called into Abe’s office. I heard one particular real money guy bought equities (Japanese banks) and sold JGBs.

Then Kuroda spoke, Nikkei and UsdJpy fell. He told reporters meeting with Abe was regular and that it was not appropriate to discuss FX with the PM. Ouch!

There are 2 large EurGbp option expiring today NY cut. 0.7750 with notional Eur1.4bn and 0.7850 has Eur850mio.
Asians

Usd/Asia is touch firmer today. Very little input – according to our Asian Desk, Perry thinks market is taking money off the table, taking back their short positions – partly profit taking ahead of weekend and other reason is due to uncertainty over reopening of Chinese market on Monday, many are wondering what the CNY fix will be.

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