FX Flows

From the FXWW Chatroom: A story in Washington Post published at the New York close that US President Donald Trump revealed classified information to Russian foreign minister and ambassador last week sent UsdJpy down from 113.75 to 113.55. To be honest, the tabloid isn’t a fan of the president and should not come as a surprise. Officials from White House have denied the report calling it “false” – National security adviser H.R. McMaster said, “I was in the room. It didn’t happen. At no time were intelligence sources or methods discussed, and the president did not disclose any military operations that were not already publicly known.”

Nikkei opened up 0.6%, UsdJpy returned to square one. There were also some EurJpy demand for Tokyo fix but exporters sold soon UsdJpy after that. Nikkei pared gains, UsdJpy seen testing low 113.40’s. Small buying reported in the low 113.30’s and 100-Day SMA at 112.95. Offers are said to be above 113.85 and reminder there is a $2.1bn option strike at 114.00 maturing May 18.

With EurJpy demand, we slowly chewed on the offers in EurUsd. I heard there are more offers scattered and some are linked to a 1.1000 option strike maturing May 18 for Eur2.5bn. Breakout artists are watching 1.1025. Buy orders are said to be at 1.0940. Some EU countries will be publishing preliminary Q1 GDP today.

There was nothing new from the RBA minutes – however, AudUsd softened on back of lower UsdJpy. Offers are still reported up at 0.7440 and this could be linked to tomorrow’s option expiry. Interesting that the 50, 100 and 200-Day SMA converge at 0.7541. Fresh bids are said to be 0.7380-90.

Oil futures firmed up this morning, WTI Crude June contract advanced above $49.00 and gave UsdCad a nudge towards 1.3621. Option strike at 1.3600 expires today New York cut for $750mio. There were some bids under 1.3590, suspect the interest is still there. Weaker Aussie has the UsdCad back to 1.3635.

Emerging Market
Japanese banks sold UsdThb at the Tokyo fix and triggered stops below 34.50. Market traded down to 34.45 very quickly before locals stepped in.

Our trader Gary said there has been chatter that Taiwanese regulators are looking to put pressure on the Taiwanese lifers to increase hedge ratio for their overseas assets, thus there has been constant pressure in the UsdTwd NDF past 24 hours.

CNH funding has been soft lately and our trader Perry said there is a talk that mainland is relaxing rules for corporate on moving onshore funds to offshore. Thus, there were funds moving into CNH and hitting left hand side in the DF. I was later informed that the easing of regulation for One Belt One Road project. USDCNH weakened after the CNY fix came in at 6.8790. According to our EM desk, most banks were looking at 6.8850

China and Hong Kong stock markets are weak this morning – Shanghai Composite Index dragged down by weak construction and engineering sector.

(CIBC)
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