FX Updates

From the FXWW Chatroom – {JN} Chinese equities had a 14 minute session today as they hit the down 7% circuit breakers early and never re-opened. This left people looking for proxy hedges and the JPY has been as good a place as any to find protection from China woes. USDJPY took out 118.00 and 117.50 and is about 1 yen lower than it was when we went home last night. From here there isnt really much support on the charts until last Jan’s lows into 117.20 and then the August blow out bottom around 116.10-00. Meanwhile we have taken in some offers into 118.50-119.00 which feels far from here but you never know in USDJPY trading. EURJPY plunged through 127.00 early in the Ldn session but we’ve bounced smartly on spec/macro demand (feels like they’re getting squeezed out of short EUR positions) and this has taken us back into the 128.00-127.50 region where we spent most of y’day (was a support on the wayb down as well). From here we’re looking at the next big support on the 126 handle (aka the April lows). If these regions are tested/broken expect implication in both EURUSD and USDJPY. In terms of expiries the bulk of the expiry traffic is above the market with about 2.2bn of 119.00s a standout and about 250 of 117.30s and 118s also on the board 

{AU} AUDUSD is another center of the China storm in FX majorsville and we have been hitting bids and stops over the past 24-48hrs taking out 7000 just this morning. We now think that the market is setting up for a re-test of 6980-50 which we tested in September and if broken opens up 6920 lows during that sell-off. But dont expect it to be a straight shot as there have been RM/local buying interest on each move lower recently and we expect this to continue. Saing that we have offers into 7020-40 now and expect more supply into 7080-7100. I should also point out that AUDUSD has been tracking AUDJPY and this pair continues to crumble taking out the 8320-00 region and now 82.00 support is next if broken there is a lot of air on the chart below and this will have likely weigh on AUDUSD as well.

{EU} EUR demand from specs (some of the same ones who got short earlier in the week) have been the feature this morning but we have seen some RM and macros willing to take the other side. So we’re rallied back through 1.0850 but we’ve found offers into the demand and now the 1.0900-10 region (where the 55DMA looms) is next resistance with not much above there until 1.0980-1.1000. Meanwhile on the downside we’re cleaned out for now but expect the 1.0780-1.0800 region to be a pivot and the next big support is still down into 1.0700-1.0680. The DTCC data shows a ton of expiries this morning ~1bn @ 1.0750 +750mln @ 1.0800 +800mln @ 1.0850 and just under 750mln @ 1.0900 some of the standouts 

{GB} GBPUSD continues its down trade with a range of concerns about the UK (brexit, economic disappointment, no hikes in 2016 etc) hanging over the market (although the Brexit seems to be at the fore on the back of recent polls { http://po.st/w4dYND }) . This has taken GBP$ through bids then stops sub 1.4600 and we’re now knocking on the Apr lows into the 1.4550-00 region. Meanwhile we expect to see supply emerge on any rebound into 1.4700-20. EURGBP had been failing to hold above 7400 but today it looks very convincingly higher as we have taken out offers and stops north of 7440-50 and although we have more supply into 7480 we think there is some damage done here now and look for this one to hold dips into 7420-00. There are about 1bn of 1.46s which could held drag this one higher all else equal.

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