CIBC FX Flows: FXWW

From the FXWW Chatroom: USDJPY weakened to 108.545, bids are said to be near 108.40 and 108.00 while offers 108.90 to 109.10. Notable option strikes due today are on topside – between 108.90-109.00, there are about $1.2bn.

USDCAD popped from 1.2875 to 1.2894 after the headline from Washington Post that US President Trump is set to announce steel and aluminium import tariffs from Canada, Mexico and the EU today (Thursday) and import taxes could take effect as soon as Friday. 3 times we tried 1.2890’s and failed. Not surprising, a huge option strike at 1.2900 will mature today, worth more than $2.8bn. Furthermore, speculators will want to sell on any rally. Our macro strategist Bipan on post-BoC, the removal of the word ‘cautious’ can be interpreted as an acknowledgement that Q1 GDP growth will likely be well above the 1.3% forecast. USDCAD backed off

Australia’s first quarter capex disappointed; rising 0.4% while experts looking at +1.0%. AUDUSD weakened on that to print 0.7553. I am not sure if this is bad news, because the revision for previous quarter improved. Corporate buying is reported near 0.7490-0.7500. Offers rumoured to be from leveraged accounts 0.7590-0.7600. Just a reminder, between 0.7530 to 0.7490, there are total of AUD4bn rolling off today.

Kiwi was a fraction lower after ANZ published the May business confidence. Bids are reported near 0.6950 and usual suspects at 0.7000. There is a huge 0.6900 option strike expiring today for NZD2bn.

Italy is not a done deal. Time is given for both Luigi Di Maio and Matteo Salvini to come up with list of ministers, correction – credible ministers that could be accepted by all parties. Must admit, this President Mattarella has power. EURUSD has come off little – still in this 1.1645-70 since Europe closed. Offers are heard at 1.1695-1.1700, do note large option strike today and tomorrow at 1.1700 totalling EUR5.85bn. Also, EUR5.5bn at 1.1800 rolling off today, little distant.

Asian and EM

NY ended USDMXN at 19.735. Tariff story sent the pair towards 19.822. Compared to previous moves, this rally is meagre.
While the USD is trying to scale back against the Asian currencies, market is still cautious about this Trump tariffs.

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