FX Flows

From the FXWW Chatroom – It is an extremely slow start to a hyper week. Currency markets were mostly unchanged since the official opening at 7am Auckland. 

Nov 30 month-end hedging could see buying of Euro versus Usd, Usd demand against Gbp, Cad and Aud. 

EurUsd opened at 1.0589 and heard some macro names added short Euros ahead of ECB on Thursday. Better offers are reported atop 1.0600 with stop buy orders building up thereafter 1.0650. Tokyo banks were seen selling EurJpy – pushing the cross below 130.00 and Euro to 1.05725. We found bids at 1.0570, scattered in e-commerce platforms. Buy orders are planted under 1.0550 and decent option expiring Dec 2; Eur3bn notional at 1.0600 and Eur4.5bn at 1.0500. 

It is ECB time. Sunday Times’ Kathryn Cooper wrote Mario Draghi is going to pump at least Eur600bn into Eurozone. Article in FT offers the following options – extension deadline past Sept 2016; ECB could beef up QE by buying more bonds now; buying different asset classes; as most expecting deposit rate but by 10bp; finally, bolstering so-called forward guidance. 

UsdJpy opened 122.80; month-end and year-end Usd funding activities will dominate the session. General chatter offers ahead of 123.00 and buy orders into 122.40’s. EurJpy was sold after Tokyo open; some said it was corporate interest but I suspect there are stops beneath 129.55. 

Not much to pen on Aud and Kiwi. Earlier in the morning, New Zealand released the Oct home building approvals jumped 5.1% versus last month’s fall of 5.7%. FX didn’t barge. It was only into late morning that we saw Nzd firming against the Aud; taking cross below 1.1000. 

UsdCad moved higher amid Usd sentiment but looks like offers are hidden above 1.3385. We found mostly, US names on the offer. 

The big move in Asia was in the USDCNH. The CNY fixed at 6.3962 inspired the USDCNH move to 6.4613. It then collapse down to 6.4279. There was no link to intervention. 

Our traders suspected that spreads of CNH versus CNY had widened to near +600 this morning and when onshore USDCNY backed away from 6.3980, market got skittish and sold USDCNH. Onshore bounced and so did the offshore, back to 6.44-handle but offshore Chinese banks sold Usd back to 6.42-handle. 

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