FX Flows

From the FXWW Chatroom: Not much without Japan, closed today for Vernal Equinox Day and Usd on the defensive most of the morning session.

Over the weekend, at the SNP conference, Nicola Sturgeon said she will go ahead with second referendum. She told Sky News Scotland will apply for full EU membership. But Moody’s warned that in independent Scotland will be downgraded to junk status. Today, UK Times published a report that the first minister would compromise on the timescale if Theresa May was also willing to move on the issue, hinting later than 2019. Speaking on Peston on Sunday on ITV, Sturgeon said that there could be “room for discussions” about a slightly later date.

A compromise is definitely seen as positive. GbpUsd ended Friday at 1.2396 and traded 1.2382-1.2400. Keep a watch on topside – the 100-Day SMA comes in at 1.2412 and 50-Day at 1.2389.

UsdJpy on the defense since Asia kicked off, sales came from quantitative funds – so-called bids at 112.50 from importers were exhausted. Some chatter of fresh sell orders into the 112.70’s linked to an option strike at 112.75 for $1.4bn expiry March 23.

EurUsd was touch firmer in the morning – opened at 1.0738 and got to 1.0757. Hearsay option-related bids near 1.0700-10, probably linked to 1.0700 option rolling off today for Eur1.6bn. Only offers heard are close to 1.0800.

Commodity currencies better against the greenback – AudUsd returned to 0.77-handle. Offers are mentioned at 0.7730-0.7750, breakout artists above 0.7755. Kiwi rose to 0.7040, looks like some hidden offers ahead of 0.7050. UsdCad drifted lower but action is dull. Speculators are caught between strength of the commodity currencies and soft oil futures.

(CIBC)
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