FX Flows

From the FXWW Chatroom – FX Flows 
It is back to China Watching. Overnight fears about weak Chinese trade was unfounded. As a result of weakening imports but improving exports, the trade surplus surged to a record high. The windfall was Yuan376bn versus estimates of Yuan292.4bn. 

Earlier in the day, speculators sold AudJpy anticipating a weaker China trade. Australia business confidence improved in Sept; NAB number rose to 5 from 1 but AudUsd backed off from 0.7363 high as specs offloaded the cross. Saw some bids at 0.7320-25 but gave way on China data. The trade surplus improved, exports was better than expected, while imports worsened, thus at the first reaction, not great for AudUsd. It fell to 0.7293. In rates space, Aud should find bottom 0.7275. Coincidentally, 23.6% Fibonacci is at 0.7277 and I heard exporters at 0.7280. According to Patrick, looking into the details of China exports and imports – pattern of iron ore imports holding up but more apparently being used to make steel for export is intact. that is ok for Australia, but hurts other steel exporters, including Japan and South Korea. Could we see a bounce in Aud? 

Euro, which ran into resistance ahead of 1.1400 yesterday, backed away from high of 1.1361 this morning to 1.13445. I hear buy orders are at 1.1330 and renewed selling into 1.1390-1.1400. There are chatter of stop buy orders above figure.  The European Union has issued a warning to Spain that plans submitted by Madrid fall short of EU fiscal rules, urging the Spanish capital to strictly execute this year’s budget and amend the one for next year to meet its targets. PM Tsipras government has submitted its reform bills to parliament. The bill is to be put up for debate before being voted on, likely on Friday night. 

Oil futures are steady but UsdCad edged higher on back of short covering activities. North Asian name paid UsdCad near 1.3000 and it was one way up, in an orderly manner. 

UsdJpy moved away from 120-handle on back of AudJpy sales and also, weak Nikkei. Hearsay bids at 119.65 and sell orders above 120.25.

Interesting comment by Bill English that NZ economy could grow less than 2% in 2015. Looking back on June 30, the Q2 Y/Y GDP was 2.4%. The Q3 GDP will only be released on Dec 17. NzdUsd didn’t react to that but tracked the AudUsd instead. 

Spot gold backed away from 1063 down to 1153.5. One commentary I read was that the precious metal has been rallying due to CNY strength. I pulled out the charts, the commentary was right. 

Again we saw UsdSgd buyers at open and headed into set of offers at 1.4030; then again at 1.4050. 
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