FX Flows

From the FXWW Chatroom – So… US reached a TPP trade agreement with 11 other nations; Canada, Mexico, Peru, Chile, Japan, Vietnam, Malaysia, Singapore, Brunei, Australia and New Zealand. However, the deal there are some difficult hurdles lined up ahead. According to Nikkei, Canadian general election Oct. 19 poses a more immediate threat. Should the current government fall, parliamentary sentiment could turn against the TPP. The trade agreement’s path forward in the country is thus unclear. In US, President Obama cannot sign the pact until early January. A month or more after that, legislation to ratify the agreement could be introduced. Debate on the agreement would then begin in earnest sometime next spring. 

Australia’s Aug trade deficit widened to Aud3.095bn versus estimates of –Aud2.4bn. July’s number was also revised down, to –Aud2.792bn from –Aud2.46bn. AudUsd dipped just 20 pips from 0.7088 to 0.7068. Came back to 0.7085 as we focused on RBA rates decision. Our strategists our strategist Bipan Rai/Patrick Bennett said they see no change just yet, but to watch for dovish tones. I hear buying interest at 0.7045. 

RBA left rates unchanged; statement weren’t different and AudUsd popped to 0.7109 and subsequently triggered stops near 0.7115. 

14:56:49

NZIER Q3 Business Opinion Survey falls 14 from +5; this is a very weak number. NZIER said weak inflation environment suggesting one more RBNZ rate cut for 2015. Not much to pen on NzdUsd, seen tracking the Aussie. Popped to 0.6509. 

Yield spreads still showing a lower UsdCad, edged higher from yesterday to 1.2665. Buy orders are light, better below 1.3030. No economic data from Canada today. We saw speculative names buying UsdCad on the Aussie number, which we felt was wrong. The Usd rose to 1.3096 then backed off to 1.3084. 

Seemed strange that Tokyo names were sellers of UsdJpy as the traders sat down. We suspected these are just proprietary trading. Gains in stock market and UsdJpy climbed to 120.575 where we experienced profit taking from CTA and regional prop accounts. I am told stops are through 120.60 but don’t get excited, renewed selling atop 120.85. Downside bids surround 120.00. 

EurUsd was trading up at 1.1190 and then fell to 1.11725 very promptly. Price action suggested a good amount of Usd bought versus Jpy and Eur. Our trader suspected EurJpy interest caused the move just when UsdJpy was trading firmer. Some chatter of buying from sovereign as well as macro names from 1.1160 to 1.1140. Offers atop 1.1220. 

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