CIBC
The big focus had been the RBA Governor Glenn Stevens’ Semi-Annual Testimony to the House of Representatives economics committee. The market is bearish Aussie, eager beavers with their fingers on the “sell” button. When he said the risk that Aussie will fall materially is underestimated – Aud fell from 0.9305 to 0.9285 in a flash. Our Chief Currency Strategist, Patrick Bennett said “The market loves this bearishness, but reality is that Aud is underpinned in a world of low global yield by still moderate growth and yield.”
We see that the regional guys are looking to sell Aud; offers are placed beyond 0.9335, however, on the bounce to 0.9318, trader saw good offers at 0.9320 planted in the e-platforms. The risk now is if 0.9280-85 breaks, target 0.9230-40, then 0.9200. Weak Nzd dragged the Aud into 0.92-handle again.
UsdJpy offers at 103.00 were challenged but supply from exporters was plenty. Printed 103.005 then fell back to 102.95. Everyone knows of the offers surrounding 103.00 but stops are also building up above 103.10; systematic and breakout funds want to buy above 103.20. Into late morning, Usd demand surfaced and drove UsdJpy to 103.05.
Euro has stayed in the 1.33-teens most of the Asia morning; market is aware of bids ahead of this 1.3300 option barrier and stop sell orders through that. Looking at the position index, although most are bearish Euro, the overall position does not show a huge short position. We suspect sellers will surfaced near 1.3330 and more 1.3350. In late morning, EurUsd got to 1.33045 and stalled.
There is a talk of bids in GbpUsd ahead of 1.6600, which is supposedly a barrier option. With August BOE Minutes coming out today, market is looking for a hint that the minutes will show one or two hawkish dissents.
Well, well. NzdUsd took out the 0.8400 – a level most people were talking about stops and ugliness but there were not fireworks. We got to 0.8389 then settled in the 90’s before drifting to 0.8380.
UsdCad sat on the side – Usd demand has kept this UsdCad
HK source.. Looks like bulk of stops in UsdJpy have been emptied. We still think this will squeeze higher, fresh bids now 102.95-103.00 and profit taking from discretionary funds above 103.30…
CIBC.. From Patrick Bennett – on UsdCad, the pair is stronger and looking set to take a push to the recent highs around 1.0985 and then on to 1.1028, which marks a 61.8% retracement of the move 1.1279 to 1.0621. A break and close above that level and the highs of late April around 1.1050 would be a strong signal of further upside potential. UsdCad support today will be found at 1.0915-20 and then 1.0875-80. Resistance is as above.
CitiFX Wire.. EURUSD is trading down to session lows. Decent selling has materialized on this move, mainly from leveraged names. Our flow has flipped in favor of selling and now has a 53% bias. EURUSD is now 1.3291 after trading down to 1.3285.