FX Flows: FXWW

From the FXWW Chatroom: UsdJpy opening up at 114.15, BOJ Sept 20-21 meeting minutes offered nothing new. Slow shift higher, led by some demand for the Tokyo fix. Comments from BOJ Governor Kuroda on persistently continue easing saw UsdJpy breaching 114.50-option barrier. Numerous stop buy orders were also triggered, touched 114.73 and drifted back to 114.40’s. The downside pain should come in near 113.90. Upside technical resistance is 115.00. We are still surrounded by option strikes maturing this week, largest is this $3.2bn of 114.50. Expect vanilla and barrier options at 115.00 strike.

Rally in UsdJpy pushed EurUsd, AudUsd and NzdUsd lower. EurUsd ran into option related bids near 1.1600. AudUsd printed 0.7639, October’s Melbourne Institute inflation expectations little changed, market isn’t expecting any change in RBA tomorrow.

Kiwi traded 0.6888-0.6915. The Q4 inflation expectations at 2.02% from 2.09%. Our macro strategist Patrick said this ticked higher earlier in the year was seen as a hawkish signal and although price has been steady, does not suggest any urgency from RBNZ. The Q3 actual inflation published Oct 17 suggests, without a message of lower inflation. Weaker Kiwi will contribute and the RBNZ will speak of that this week. NzdUsd support comes in at 0.6830-40.

Other than Nikkei, Asian stock market fell this morning with some pointing fingers at Saudi Arabia. On Saturday, Saudi reported that it had intercepted a ballistic missile fired from Yemen. Saudi’s claimed that the missile was backed by Iran. However, I believe weak HK and Shanghai could be due to PBOC Governor Zhou’s warning over the weekend about cutting debt and eliminate zombie companies.

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