FX Flows

From the FXWW Chatroom: AudNzd has done well, tracking the yields spreads. Used to be “pain trade”, the cross attempted to take on this 1.13-handle but found profit takers. Our trader Jon was also taking money off the table even though he noted yield spreads still pointing higher, 1.1365. AudNzd then attracted more selling, mostly platform accounts, took the cross to 1.1275 but that was short lived. The cross bounced back; took out previous high 1.1318 to print 1.1325.

AudUsd climbed just as AudNzd took a peek at 1.13. My colleague thinks the AudUsd was bought on proxy trade with strong Asian currencies (especially the Myr). AudUsd took out the hourly resistance near 0.7630 but exhaustion sets in ahead of 0.7650. It seemed that layered offers from unknown source scattered up to 0.7680’s and this could have prompted interbank traders. By the late morning, Nzd fell back, took AudUsd along to 0.7630.

UsdJpy printed 112.42 after New Yorkers ended the day. Some talk of offers from local corporate atop 112.50 and importers at 112.10, more towards 111.65. We saw buying from AAA name out of North Asia below 112.20.

Interesting UsdCad price action. The pair started off near 1.3050 and traded lower on AudUsd strength. But as soon as AudUsd dipped back just 10 points, the UsdCad jumped to 1.3050’s. Interesting eh? I heard corporate account also bought UsdCad, which took us to 1.3060’s. Swiss name buyer into the 1.3070’s. Market is aware of bids sitting under 1.3010.

Not an interesting day for Euro, but that is pretty norm – short-term offers said to be placed near 1.1235 and those offers mentioned yesterday, atop 1.1330 have been lowered to 1.1285; am not sure the sized though. Weak stops near 1.1215 but I think better ones are below 1.1195. Option strike at 1.1200, worth Eur1.4bn, rolls off today NY cut.

The Malaysian Ringgit is the stellar performer this morning. Following yesterday’s announcements, offshore UsdMyr NDF opened at 3.9990 and the pair continued to descend to 3.96’s. The offshore dragged the onshore below 4.00 and eventually to 3.96’s.

Very normal for speculators to treat UsdSgd as proxy to UsdMyr. The pair was sold off from 1.3615 and printed 1.3580. However, cross play seen squeezing the UsdSgd shorts back to 1.3615.

Traders are cautious about Korea. KCNA issued a note this morning that North Korea can attack “within” or “near” South Korean presidential house. Onshore UsdKrw opened at 1156.0, after low 1155.5, the onshore pair spent most of the time in the 1157’s.

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