FX Flows

From the FXWW Chatroom: The announcement by German pharmaceutical company Bayer increasing its bid for Monsanto by by 18.6% to $127.50 per share got traders talking about the M/A weighing on Euro because this is an all-cash deal. This deal has been back and forth since May 23. Even if the board of Monsanto finally accepts the offer, this is still up for regulatory approval.

Speculative names, I guess “fast money accounts” were the main sellers of EurUsd but bids are mentioned below 1.1140. There is also the 200-Day SMA at 1.1132 as well as 50-Day at 1.1139. Two decent option strikes roll off today New York cut, 1.1115 and 1.1120.

Tokyo banks have been the regular sellers of UsdJpy since open but our trader doesn’t think we will breach this 103.20-80 range today. Hints of buy orders under 103-handle, especially near 102.75. There is a 103.00 option expiry today New York cut and we could run into some gamma play ahead.

Towards the mid-morning UsdJpy firmed up to 103.81, believed the demand linked to AudJpy cross. Just as market loaded up UsdJpy, PM Abe’s advisor Koichi Hamada said BOJ should wait for Fed Reserve before taking action – sent UsdJpy to 103.45.

AudUsd has been firm since start of day – initially via EurAud and followed by AudJpy. Aussie also got a boost from narrower August trade deficit. Spot AudUsd rose to 0.7620’s – rumour that breakout artists have stop buy orders above 0.7645.

Canadian dollar tracked oil futures but seemed some profit taking bids noted below 1.2925.

Emerging Market
USDCNY mid fixed at 6.6676 as supposed to traders’ guess of 6.6810 sent USDCNH spot down from 6.6905 to 6.6879. But felt like some eager Usd buyers on this dip. USDCNH later rose to 6.7000 – suspect the move was for stop loss orders; and then fell back to 6.6950. There is also a chatter of several 6.7000 option strikes expiring today.

Rest of Usd/Asia didn’t move much, in fact UsdThb edged towards 34.80 following talk of corporate buying (long time M/A deal) and vicious onshore rumour that we are advised best not to talk about.

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