FX FLOWS – FXWW Chatroom

Overall, quiet session, with Usd slightly bid this morning. 

EurUsd kicked off at 1.1115, drifted lower from high 1.1118 – regional bids kick in from 1.1045 but decent below 1.0850 (though far, comes from an interesting name). Sellers atop 1.1190. Throughout the morning, Euro stayed in the 1.10-ninties. Market will be looking out for performance of the European stocks. From what I read, if the stocks continue to weaken, EurUsd should get some support as investors unwind short hedges. Seller orders are mentioned at 1.1190 and higher; some chatter of bids at 1.1050. 

General chatter that Japanese oil importers bought UsdJpy this morning along with one mid-sized lifer. Macro names are on the offer at 124.50 while exporters hover above 124.90. Japan Q2 GDP growth, though better than expected, it was weaker than previous quarter. In addition, private consumption and business spending weak too. 

Member of Bank of England MPC Kristin Forbes argued that BOE should raise rates well before inflation hits 2% target; however timing depends on more evidence on inflation trend. Forbes wrote in The Telegraph said maintaining interest rates at the current low levels during an expansion risks creating distortions. Therefore, interest rates will need to be increased well before inflation hits our 2% target. 

UsdCad range 1.3091-1.3109 – offers are lined up above 1.3150 while most of the buying are under 1.30-handle. Today, Canada releases the international securities transactions for June; previously -C$5.45bn, forecast is -C$6bn. But market will be keeping an eye on inflation report this Friday; according to Avery Shenfeld, core CPI could nudge a tick higher on a year-on-year basis to remind markets about the pass-through impacts from a weaker exchange rate. 

Seeing spot Gold slowly edging higher since open, high 116.80. On Sat, China released a report that it’s gold reserve rose 1.16% to 1,677.3 tonnes at the end of July from 1,658 tonnes the end of June. 

PBOC fix offered no surprise – at 6.3969, all within market’s expectations. Those involved in CNH structures are still looking to buy back spot; we saw couple of sellers in USDCNH, linked to repatriation. Post-CNY fix, mainland banks were better sellers of USDCNH – heard bulk are linked to repatriation. 
UsdMyr climbed and settled comfortably above 4.11; like last week, traders complaining about poor liquidity.  5 out of 10 banks have pulled out of onshore interbank, not making prices until further notice. Some banks have also ceased taking FX orders for the 11.00am reference. 
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