FX Flows – FXWW Chatroom

An interesting start – prior to opening, speculators sold UsdJpy expecting some LHS interest into the FY end fixing. UsdJpy, which was at 120.21 when I sat down (about 4.35pm EST) and pushed down to 119.99. As Tokyo got going, UsdJpy turned around. There was a decent bidder in AudJpy placed in one of the common platforms from 91.95 and he pushed the market up. UsdJpy rose to 120.13. UsdJpy continued higher after the fix, some talk of small demand linked to month-end rebalancing. 

UsdJpy coming back to 120-teens, Nikkei gave up 1% gain and into red. AudJpy buying ended, the cross dipped to 91.70. Into late morning, Nikkei recovered into black and UsdJpy hauled up to 120.20’s. 

Tokyo opened with AudUsd at 0.7650, we got down to 0.7640 and that is when AudJpy interests surfaced. AudUsd only managed 0.7665 then following a more than 3% fall in Dalian iron ore futures contract. Into our late morning, Aud took another push to 0.7627. I heard there are bids surrounding 0.7600 from exporters. 

One news article in AFR said PBOC easing property measures is positive for iron ore but the Dalian iron ore futures fell more than 3% on open. Couple of experts are calling for RBA rate cut in April. 

Last week our trader Jon noted about the spreads between yields of the Aussie 2-year Government bond and UST, versus the AudUsd and found the currency overvalued. Today at 0.7650, somewhat in line with the yield spreads. Jon sees this pair trade 0.7610-70, with a liking  to sell rally. 

Flow into EurJpy carried EurUsd up to 1.0846 high but speculative sellers emerged and forced the single currency into 1.0815 in the late morning. From what I understand, some sellers positioning into selling of Euros for month-end balancing. Heard from the street that sell orders are planted above 1.0860 up into 1.09-handle. Euro low has been 1.08155, we suspect some buying into 1.0800-10. 

Addressing the parliament on late Monday, Greek PM Alexis Tsipras appealed for an “honest compromise” with lenders but warned Greece would not agree to an “unconditional” one, after its biggest creditor demanded it do more to show commitment to reform. 

In Canada, the January GDP will be released today and growth is set to register an outright decline. We are calling for fall of -0.2% m/m, in line with consensus. UsdCad declined from 1.2690 to 1.2675 post Toronto close. As Asia got going, Japanese accounts bought CadJpy, kept pressure on UsdCad. Once the fixing was done and dusted, UsdCad jumped to 1.2699. 

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