CIBC Market Talk: FXWW

From the FXWW Chatroom: Japan is closed today for Labour Thanksgiving, we started the session slow and we still feeling the load from Yellen and FOMC.
The key action today has been the EurJpy. We saw some speculators putting pressure on the cross and took out key support 131.33 (trendline as well as 100-Day SMA), to print 131.22 – no follow through. The pair hovered in the 131.30’s then powered back with vengeance. I suspect stops were taken out above 131.55.
Sales in EurJpy got the UsdJpy pair to 111.07 then slowly reversed back. Without the name Japanese players, the EurJpy dominated the show. The UsdJpy was pulled along and by late morning, we got to 111.37. UsdJpy should see resistance at 100-Day SMA 111.68 and 100-Day SMA at 111.73. On the next support is obviously 111.00 but the real deal is 110.60-70. UsdJpy options maturing today – 110.70 for $600mio, 111.00 for $620mio, there are near $1.53bn worth from 111.65 to 111.90.

Not great deal for EurUsd, it was mostly dominated by the EurJpy cross. Some talk that offers are scattered on top side, closer to 1.1870-80. Business in EurJpy had the EurUsd taking out offers atop 1.1830 to print 1.1838. Only interesting option strike today is 1.1785 for about Eur1bn.
Not much to pen for the Antipodean currencies – one observation from our macro strategist Patrick Bennett that Canadian dollar has been best performing currency past 6 months while Nzd sits on the bottom of the G10 space. With Cad vulnerable to the ongoing NAFTA negotiations, Pat is suggesting going long NzdCad
Onshore UsdKrw opened at 1086.00 and edged higher slowly. Remark from South Korean officials took Usd to 1089.5. They said the government is to play a role in FX market stability. One senior FX official said some offshore speculators are failing to notice the government’s willingness to stabilise the financial market. Our macro strategist Patrick Bennett said none of these comments are unexpected. We remain positive on Krw though concede that adding to positions here takes some doing. Patrick said on long-term perspective, UsdKrw has been stable since 2009 within 1000-1250. Strong external demands reflected in the exports, strong GDP growth and persistent portfolio inflow. Krw will continue to perform in tandem. Patrick sees UsdKrw towards 1000 before a return to 1200.

Singapore Q3 economy performed much better than expected. Full year is seen at 3-3.5% up from estimate of 2-3%. UsdSgd didn’t move much on that strong numbers – there has been some talks that local agents have been bidding the pair.

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