FX Flows

From the FXWW Chatroom: UsdJpy weakened when Nikkei reopened in the afternoon. UsdJpy which held well at 100.60 broke and slipped to 100.245. Some linked it to Dallas shooting as well.

GfK publishes the Consumer Confidence which is post-Brexit, falling to -9 versus -1 in June. Economic outlook for next 12 months down at -29 from -14. This had nothing to do with GbpUsd move – selling again seen from Tokyo before GfK numbers, from 1.2910 to 1.2881. Short covering from Tokyo names carried the GbpUsd back to 1.29-handle.

It is the amazing Kiwi-Man. Why is this NzdUsd so bid? Our macro strategist Patrick Bennett said there is a lot of comments and debate in Kiwi newspapers about whether RBNZ should just “get on with it” in changing the LVRS. Consensus, post-yesterday’s speech, is that this reduces the prospects of central bank cutting rates. Even as Deputy Governor Spencer said, the policy will be influenced by the inflation rate, just like Australia.

NzdUsd took out the resistance at 0.7250 and printed high of 0.7272. Next level to watch is 0.7300, previous high on June 24. AudNzd declined to 1.0326 .

The Australian dollar has tried to take out 0.7550 three times and failed. The stops are still there, 0.7555-75. Aussie strengthened little but head into obstacles amid AudNzd selling. Keep an eye on down side, danger lurks under the 200-Hour MA at 0.7458.

Tokyo names bought GbpJpy and brought UsdJpy from 100.72 to 100.965. With overnight low at 100.60, there is a small chatter of Tokyo name bidding there. Could be that “dark lord”? Officials from FSA, BOJ and the MOF met but nothing special came out of that. Vice Finance Minister for International Affairs Masatsugu Asakawa said Japan will act accordingly if there are speculative moves.

Nikkei and Topix were flattish in the morning. UsdJpy is struggling. Nikkei fell when the index reopened sending UsdJpy lower to 100.245. No sound from the Japanese officials.

Feels like profit taking in the spot Gold this morning. The metal started the session above 1360 and we are now in the lows 1355. Will we see similar activity in UST?

UsdCad is just tracking the oil futures. Keep an eye on the oil price. Looks like risk is downside. Offers are light into 1.30’s thickens nearer to 1.31.

Deputy editor of The Telegraph Allister Heath gave his 10-pointer on how to kick start the UK economy – in his #10, he said BOE might cut rates next week. Market consensus is 25bp cut but Allister Heath is saying Carney may as well cut rates to zero.

(CIBC)
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