FX Flows – FXWW Chatroom

It was a messy start – Nikkei fell below 20k mark yet Japanese were better buyers of AudJpy and UsdJpy, keeping the Usd pair up above 123.40. UsdJpy backed off after the Tokyo fix and we filled fair amount of bids at 123.30 after the China PMI. Again, we witnessed Tokyo banks buying Usd consistently down to 123.20. Well, rule of the thumb, in event something happens between North and South, UsdJpy will strengthen first but will it be same this time? 

UsdJpy fell below 122.00; macro funds jumped in to add to short UsdJpy and market touched 122.81. 

EurUsd continued to grind higher – took out some sell orders at 1.1250. Some said the move is linked to EurAud and EurGbp demand. We continued North to 1.1290. Bids are now gathering below 1.1180 and nothing till we get above 1.1330, where sellers come in again. Think we wait for the squeeze to 1.1480, that’s where real sellers will surface. 

Despite Japanese grabbing AudJpy this morning, AudUsd took out stops in the 0.73-teens. Weak China manufacturing PMI sent AudUsd to 0.7285. According to our trader Pawan Kalia, short squeeze is seen in the Aussie rates spaces as market now dragging RBA back to the table – fully pricing a 25bp cut by April 2016. AudUsd bounced back to 0.73-teens. 

Despite a narrow range, UsdCad paced the AudUsd morning of the time. When Aud traded to the lows 0.7285, UsdCad ran into offers 1.3105-10. We suspect these are from macro names. 

China Caixin Aug flash manufacturing PMI was soft at 47.1 versus 47.8. This number was a surprise to expectations, though really difficult to be stunned by a result that confirms the slowing momentum in the economy. This simply confirms the recent market trends – USDCNH, USDCNY only in the new environment should be firm, though only to the extend in broad Usd selling that the trade-weighted depreciates. 
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