FX Flows

From the FXWW Chatroom: Into late New York hours, ORB/Telegraph Poll sent Cable rallying to 1.4721. EU Referendum polls showed Remain camp with 7-point lead at 53% versus 46% for Leave. It was pure panic buying, believe some were for short covering. Talking to trader Jon Katz and he heard pension funds are the ones who are short GbpUsd.

GbpUsd has slipped back below this 200-Day MA 1.4683. A lot of technical resistances on topside to watch for. Daily trendline at 1.4710 and 1.4725, previous high May 31. EurGbp printed 0.7699 then rose to 0.7730’s with short covering by interbank.

RBA June Minutes offered nothing new. AudUsd not much impact but staying firmly above today’s 55-Day SMA comes in at 0.7445. Weak stops were taken out as spot traded 0.7488. Our trader Sam think s AudNzd may have found a base though, 1.04-1.05. Sam noted AudNzd may have found a double bottom at 1.0410-20. Could target 1.10.

Despite higher UST yields and positive Wall Street, UsdJpy traded weak side as experts see the pair at 100 before BOJ steps in. Japanese Finance Minister Taro Aso spoke to reporters and declined to comment of specific action in wake of Brexit. Aso did reiterate the importance of stable FX and abrupt moves are not desirable. Japanese stocks turned positive, UsdJpy trades up to 104.15 before he said he won’t intervene in FX so easily. UsdJpy fell back to 103.80’s. I was told of an EurJpy buyer (leveraged name) and rather consistent as well. Suspect he was the one who paid UsdJpy back up to 104-handle. Then there is also this rumour of stealth buying below 103.55 and exporters atop 104.20-30.

Oil futures prices are slightly lower but Cad followed Aussie instead. Our strategist Bipan said weak wholesale trade data both on nominal and real terms suggests that economic divergence with the US is a real thing this quarter which should support UsdCad going forward. Still, there’s room for this risk rally to extend and that should keep Usd well anchored into the overnight session. Support of 1.2750/60 will be key to monitor ahead of retail sales and incoming Brexit polls/debates.

Do keep a close watch on AudCad. This cross has traded above the 50-Day SMA of 0.9557 but there is the 55-Day at 0.9583, coincides with trendline from March 03.

Fed Res Chairwoman Janet Yellen will appear before the Senate Banking Committee today and tomorrow at 10.00am New York for her semi-annual monetary policy testimony. From WSJ, lawmakers may push Yellen to explain how officials’ international concerns are shaping their domestic policy decisions, and how they can accomplish the goals set by Congress if doing so would have negative consequences for the rest of the world.

(CIBC)
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