FX Flows

 From the FXWW Chatroom: Ahead of Asia open we saw GbpUsd traded lower in thin market. New York left the pair in the 1.2250’s and just minutes into Tokyo open, someone smacked it down to 1.2220’s. Someone said it was reaction to European Council President Donald Tusk’s remark on hard Brexit but we doubt it. Weakness in Usd across the board and Gbp got back to 1.2250’s. Thank you.

EurUsd closing in the 1.1050’s, the pair got to 1.10415. In all, not exciting. Market feels little short and a squeeze to 1.1105 could trigger some intraday stops. And FYI, there is another 1.1000 option expiry next week Oct 18.

Article from Nikkei claimed that the major sellers of UsdJpy yesterday from 104-handle came from Japanese exporters. Those who went long got hurt badly and forced to cut. Most traders are eyeing this Ichimoku Cloud 103.51 and also 100-Day SMA at 103.32. Nikkei flattish, UsdJpy bought for fix – some linked it to importers hedging ahead of tomorrow’s Gotobi-Day. Sell off in UST, 10-year yield gained 1.7657 from 1.746 and this probably the root behind UsdJpy move to 103.98.

Today NY cut expiry for UsdJpy strike 103.75 for about $1.1bn.

NzdUsd and AudUsd also ended higher in Asia morning. The Kiwi executed stop buy orders above 0.7105 and continued to 0.7120’s. AudUsd rose to 0.7604 where some resistance met. Our trader Jon suspects the resistance is linked to AudJpy offers near 79.00-10. Jon also reckon there may be stop buy orders thereafter.

We saw some buying of UsdCad in mid-1.3190’s prior to Asia open – I think these guys all punting on the 200-Day, which is at 1.3190. UsdCad rose to 1.3225 and strong Aussie pushed the UsdCad lower. There are bids in the mid-1.31’s and offers are light unless we see 1.33-handle. Canadian home sales data today but market will be watching BOC next week Oct 19.

Our strategist Bipan wrote BOC will keep rates on hold next week and will be monitoring is the extent of the dovishness. The other thing to watch is extent of the downgrades to the BOC’s prior forecast. How to play

How to play this? Sound dovish enough so that the market prices in rate cuts and the Cad weakens. Bipan believes no action from BOC and will be dovish. He target’s 1.37. (CIBC)
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