FX Flows

From the FXWW Chatroom: It’s all about the yield, about the yield.

UsdJpy did not have a difficult time taking out the 111.00 option barrier. There were not a lot of offers 110.95-111.00 but we did encounter Japanese sellers. Buyers were mostly non-Japanese and lifted UsdJpy to 111.125. Japanese were again sellers of UsdJpy, EurJpy and pushed dollar back to 110.90. There was a talk of demand for fix linked to yesterday’s Gotobi-Day but didn’t materialize. Softer UST yield brought UsdJpy to 110.65 where I was told bids are under 110.70.

EurUsd ended last week at 1.0588, opened up firm at 1.0610. Touched 1.0616, which is also the weekly trendline. Euro drifted lower slowly and more pressure when UsdJpy bid up. There was a round of EurJpy selling which got us 1.0578 and when yields of UST came off, EurUsd was bought back to 1.06. Orders are light but keep an eye on the EurCad downside; prop guys have stops just below 1.4275.

NzdUsd took out some stops below 0.7000, low seen 0.6983; then slowly back to 0.70-handle. Some said the profit taking was on back of Kiwi Finance Minister Bill English’s comment on budget surplus and tax cuts. Technically we should see this pair capped at 0.7030 but better at 0.7072. Sam thinks this pair could head to 0.66-handle.

Very little seen in AudUsd – weak Usd sentiment pushed the pair higher towards 0.7343. Long term resistance at 0.7338-0.7340, lower band of the Weekly Ichimoku Cloud.

Cable first slipped to low 1.2318 then bounced back up to 1.2330’s, which I believed was caused by The Times article that British PM Theresa May is to pledge corporate tax cuts today. There is not specific rate and Times said May will match Donald Trump’s plan. There are some weak stops just above 1.2400 and little mentioned on downside.

News on oil – Ambrose Evans-Pritchard wrote in The Telegraph OPEC is posed to slash oil output. He said OPEC reached a political accord in September to cut supply and failure to do so, would be the final nail in the coffin for the cartel’s  shattered credibility. Then at the APEC Summit, Russian President Vladimir Putin told reporters today that he sees likelihood of oil cut and Russia has no problem with it.

As such, oil futures opened up higher and UsdCad weaker from 1.3515. Some option guys were selling Usd this morning, could be linked to small 1.3500 option expiry today and larger one on Nov 23. Small selling into mid-1.35’s and improves on to 1.36-handle. Most of the buying below 1.3395.

(CIBC)
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