FX Flows via FXWW Chatroom

Another wild day for the Kiwi, clear break of 0.75—handle took out some very nasty stop loss orders. Then a strong Q1 retail sales propelled the bird to 0.7563. 

Our strategist Bipan noted that the retail sales ex-inflation came out stronger than expect. At 2.7%, this is the highest since Dec 2006. This is a signal that domestic demand may not be as glaring of an area of concern as the RBNZ had thought. However this data (as pointed out by our traders) includes the Cricket World Cup, hence this may have distorted headline result. 

NZ retail sales instigated profit taking in AudNzd but the pair seen supported near 1.0750. AudUsd was later bid up and banks targeted stop loss orders near 0.8140. We got up to high of 0.8164. One newswire commented of decent sell orders lined up from 0.8180 to 0.8200. Exhaustion sets in, Aud drifted back towards 0.8130’s. Another reason for pullback in AudUsd was the weak iron-ore futures in China. DCE Sept 15 was down 3.33% by noon. 

Strong UST yields vs weak Nikkei and UsdJpy saddled within 119.10-30 most of the time. I heard stops are planted beneath 119.00 while buy orders ahead. Offers from offshore names are at 119.35-50. Japanese PM Abe will give a press conference today at 0900GMT and from what I understand, Abe will be speaking on military expansion. His cabinet will approve legislation today to allow Japan to defend other countries. 

14:52:44

I like Richard Nixon’s piece in WSJ explaining this bond market rout. However, the problem with all these explanations is that they are too Europe-centric and ignore the fact that this has been a global selloff. Fears over a Greek accident might explain a selloff in longer-dated peripheral Eurozone bonds, but not a selloff in UST. 

EurUsd offers are stacked up from 1.1390 to 1.1410 from several guys. I cannot confirm, but some did mention strategic and reserve names. Buy orders are said to be near this 1.1300. I am also told decent stops in EurGbp above 0.7230. 

Feels as though market is tad short in UsdCad. We saw this pair hitting low 1.1938 and bounced back into forties. I heard there are decent stops planted at 1.1900 but real money have buying interests ahead. 

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Asians 
UsdKrw is very firm this morning. The pair opened at 1092 and, unlike rest of Usd/Asia, this pair firmed to 1097.5. One rumour going around that Washington-based advisory issued a report that BOK will lower rates when MPC meets tomorrow. Many do not expect BOK to cut rates from current 1.75% This could be just position talk. Our trader Gary prefers to watch from side and enter short if there is no cut. Our strategist Patrick put out a piece and he said the bottom line is to fade any Krw weakness on a BOK surprise (to the market) cut. 

USDCNH opened near 6.2010 – saw various sellers and we took a quick dip to 6.1988 before returning to 6.20-handle. CNY fixed at 6.1093, strongest since Feb 2014. 

UsdThb traded down to 33.44 this morning – in line with most Usd/Asians. Global positioning index is still showing extreme long Thb and I suspect break of 33.20 may trigger some panic liquidation. 

On the Thai political front, yesterday Constitution Drafting Committee proposed to PM General Prayut that a national referendum be held on the new charter. CDC’s call for referendum was supported by NRC. 

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