Citi: global overview: Our EM flows highlight a renewed interest by investors, with most of the buying concentrated in EM Asian FX and selectively across CEEMEA (TRY & ZAR). Our LatAm strategists note that the Dilma victory in Brazil is not fully in the BRL and we could expect further BRL selling in the following days. In the G10, client trends imply they are still interested in reducing large positions, buying back JPY, CHF and AUD. The JPY buy-backs are showing less and less interest from leveraged accounts, flagging it as a currency to watch, however flows do not signal a sell JPY environment yet. CAD is developing a sell trend. 00:45:17 Citi: Long USDCAD – Views on the Canadian dollar remain bearish from our Spec investors (combined hedge fund, real money and CTA flows). 00:45:40 Citi: · G10 – Clients continue to buy JPY, AUD and CHF, which we expect is reducing short positions. USDs are being sold in aggregate. · Asia – Net inflows in the region mainly driven by real money and leveraged investors. Most currencies in the region witnessed inflows with SGD and THB only exceptions. · CEEMEA – Overall the region capturing net inflows, mainly through TRY, ZAR and PLN. · LatAm – BRL was the only Latam FX to see meaningful selling, and should remain under pressure after the election. Other currencies generally saw inflows, especially from RM.
NZDUSD 4hr shooting star (just closed). 7913 is a multiple fib level accross different time frames. Selling from here
FX Flows
EurJpy, NokJpy were bought at the Tokyo fix this morning. Why NokJpy? One Nordic bank said there was an M/A announced last week, Mitsubishi Corp is paying Nok8.88bn (about $1.35bn) to buy Norway’s Cermaq ASA. The offer was accepted on Oct 21 and official acceptance made overnight.
UsdJpy rose to 108.00 but offers from exporters lined up above the figure. Dollar drifted lower; Nikkei Index small down. UsdJpy bids are said to be forming near 107.60-70. Nikkei article that BOJ it to downgrade its forecast of real economic growth for fiscal 2014 from 1% to 0.6% on the continuing negative impact of the April 1 consumption tax hike.
EurJpy buying from Japanese boosted the Euro beyond 1.2700 easily. Small sell orders are mentioned from 1.2710 and better above 1.2730.
AudUsd printed 0.8824 following the jump in China’s Sept industrial profits. Last month’s number rose 7.9% from -0.6% previously. It is a fantastic number but as Patrick Bennett pointed out – while last month’s -0.6% may look soft, the month earlier was +24.2%. Both Aussie and Kiwi ended the morning near the day’s high.
Definitely a lot of interests in Nok and Sek during Asian hours. Riksbank meets today and widely expected to cut rates to 0.1% from 0.25%. This along with the Mitsubishi Corp/Cemaq ASA story got people buying NokSek and selling EurNok. However, into late morning, I was informed that macro name turned seller of EurSek.