FX Flows

From the FXWW Chatroom: Japan’s Q4 final GDP grew little better than previous estimated but the most substantial improvement was the capex gaining 2% versus 0.9%. UsdJpy, very much unchanged. At the pre-Asia open, we saw some early birds trying to pre-empt Japanese but didn’t work out well. UsdJpy slipped back slightly to 113.80’s. UsdJpy and EurJpy came under pressure, rumour that sales of both pairs came from macro names.

Offers are mentioned in the 114.20’s, I suspect these are corporate names. Better selling seen nearer 114.45-50. Downside bids 113.40-60.  Reminder that there is a 114.00 option strike maturing Friday March 10 with $2.8bn notional.

AudNzd opened up above 1.0900, first time since May 2016. Despite cross trading in narrow range, we certainly did witness good two-way business between 1.0905 and 1.0912. NzdUsd trading below the long-term trendline 0.6970 but holding above this 0.6950. In the late morning, AudNzd took off and printed 1.0925. NzdJpy is also another pair to watch out for, break of this 80-handle could target 78-handle.

EurUsd saddled between 1.0563 and 1.0574. Only thing was EurJpy selling which capped the EurUsd from advancing in the 70’s. Heard that some offers are gathering near 1.0590, with chatter of small option expiry today at 1.0600 for about Eur1bn. In Europe, we will have the release of Jan German and Spanish Industrial Production and French Jan trade balance.

API Report showed increase in US crude stockpile of 11.6mio. Oil futures haven’t moved much – WTI April contracts at 52.81. UsdCad is stuck, I do suspect market is positioned long and stop sell orders under 1.3385 from short-term accounts. Small sell orders on top, gets better and better above 1.3465.

(CIBC)
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