FX Global Flows

From the FXWW Chatroom – {AU} The big story in Australia overnight is that the employment picture is looking upbeat and the thinking is that this keeps the RBA sidelined for now. From and FX perspective this saw AUDUSD rip through 7150 more or less re-taking everything that the pair had lost on Friday’s NFP induced sell off and although the market had been much less short of AUD with a lot of consolidation squaring etc into the 7020-7080 region the past few sessions we now wonder if people arent going to try to take the other side. In any even we do anticipate selling interest if we take a run toward 7180-7200 and have bids starting to form into 7100-7080 (more or less where we topped out earlier in the week). AUDJPY has also rallied toward last month’s highs on the 88 handle and the 100DMA ~88.20 which if broken could lead to another leg of AUDUSD strength. There are about 1.2bn of 7200s rolling off this morning which aren’t close but aren’t that fair either 

{EU} After squeezing out shorts on a run through 1.0780 in early Asia traded the EURUSD took a quick look below 1.0700 earlier this morning in Ldn helped by some Draghi comments on inflation (or lack thereof {NSN NXP61F6TTDS9<Go>}) but we’ve since regained 1.0720 as our usual buyer base (RM/Corp demand) emerged on the dip (along with some macro position squaring) and so here we are back in the range and waiting for a catalyst to break out in either direction. We do think the market will find selling into 1.0780 if we re-test as we’ve now failed to get through there and run out of steam into 1.0800 earlier in the week as well. But having said that the market did gap through this region on Friday and FX markets have a funny way of filling in gaps before moving along. So if we do see a rally into 1.0820-40 it is to be faded (was support early last week). Meanwhile on the downside the 1.0700-1.0680 ought to see congestion but we have barriers and stops below this region into 1.0650 and below. There are some very large expries around 1.0700 and just below this am including ~350mln of 

{GB} After yesterday’s employment induced rally in GBP things are a bit off boil this morning as we topped out into 1.5250 in GBP$ and now find ourselves looking to 1.5150-1.5200 as a region of support (had been resistance). If we do manage to break through 15250 the next resistance is 1.5310-20 where the 50DMA resides. EURGBP has been very unexciting over the past 12hrs as we’ve seen better corp demand in our flows and expect support into 7040-20 (which is the breakout region from Thursday and maybe a gap to be filled in as well). Meanwhile on the topside there is not a ton on the order book until 7080-7100 and we anticipate solid selling interest into 7140 and expect the road to 7200 to attract further supply with the 100DMA just above and the 200DMA ~7240. 

{SZ} EURCHF retested the 1.0760 region which we’ve been finding very solid support into the past few sessions but with rumblings in Spain, Portugal and Greece we can’t see this region holding forever and have noticed that where we had been seeing buyers on dips into 1.0800-1.0780 in our flows (specs mostly) we’ve now found some options related selling interest into 1.0800-20. Also worth pointing out is that USDCHF has rejected 1.0080 the past 2 sessions and although we think this one is ultimately headed for a run through 1.0100 and possibly into the 1.025-1.03 region where we topped out in the spring, we believe the market needs to do some consolidation in the 1.0000-50 region (which we took out on Friday and we have not seen since March). If we break below watch 9950 as support seeing as this was a consolidation region last week. 

JN} USDJPY has been rangy the past 24hrs but we are struggling to hold 123.00 with local supply above but spec and some RM demand on the dip. So we expect to find buyers below 122.80 and more to emerge on a dip into 122.40. Up above 123.40-50 should be a congestion area with selling interest into 123.50-70 on the books and more offering interest very likely into 124.00 (levels not seen since August). I should point out that EURJPY has had a pretty substantial decline from the 133.00 level earlier in the week and you wonder if we’ve retested of the 131.50 region this morning (which held last week). If we do continue lower this will have implications for both USDJPY and EURUSD. There is +2bn of 123.00-123.50s with 1bn of 123.35s rolling off this morning 

{CA} Overnight USDCAD tried to test the lower bounds of the 1.3250-1.3300 range that we have been in the past few sessions now but we found demand into the 1.3240-20 (which was a pivot last week) and here we are right back in the range. Even though energy moves didnt impact the pair y’day keep an eye on oil today as this is sure to move this pair eventually. There is not much of note expiring today but there are about 1.5bn of 1.33s rolling off tomorrow at 10am which seem to be in play this morning already.

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