CIBC

FX Flows

DXY Index firmed up after soft start. China and Hong Kong equity indices are in red territories.

Small buying of EUR$ and its crosses following FT article where France said Putin has moved towards de-escalation. EUR¥ reached 132.00, some profit taking noted, this placed pressure on the EUR$. I was told that there are several banks recommending long EUR¥ potentially breaching 134.50. More profit taking in EUR¥, the cross returned to where we started, so did the EUR$. I believed market realised there was no mention of Belarus from Russian officials. A round of USD buying and EUR$ slipped to the 1.1420s. I read that bids have gathered below 1.1420, suspect to be from real money accounts, some weak stops below 1.1390. Just a reminder that €1.25bn worth of 1.1400 option strikes mature today.

$YEN was bought at start for the fix, though not a significant amount. I heard that the Japanese retail traders have collected back some short $YEN positions, likely to re-establish or increase shorts on rally, above 115.50 or close to 116.00. EUR¥ met offers at 132.00, profit taking pushed the cross towards 131.80s but with UST yields staying put, $YEN firmed up, while EUR$ fell back. There are several option strikes for tomorrow, scattered between 115.35 to 115.80.

Citi

European Open

The NY session post the European close saw major equities indices dip. However, overnight, the major story revolved around a WSJ article early in the Asian session citing a former RBA member calling for four hikes. This triggered sharp moves in the Aussie bond market with 10y yields +13bps. This spilled over into UST and JGB markets as well, with UST gaining 3-4bps across the curve and JGB 10y rising by 3bps. The gain in US rates pushed DXY up. The effects could be seen in the rest of G10 with JPY and NOK the most hit.

Looking ahead, USD will sight trade balance at 13:30 GMT. We will closely watch ECB’s Villeroy (dovish-neutral) speaking at 17:00 GMT, as we watch if there is any dovish pushback. On the EM front, PLN sees a base rate announcement where Citi Economics forecasts a hike of 50bps hike, although they do see a risk of a 75bps hike. CZK eyes retail sales 08:00 GMT, CLP a CPI at 11:00 MGT, and BRL monetary policy minutes at 11:00 GMT.

Oil markets which were modestly in the red since the European close gained slightly ahead of the European open. Meanwhile, S&P eminis and Nasdaq100 futures saw a flat Asian session following a dip in the NY afternoon.

AUD saw a grind higher since the European close give way slightly, with AUD being modestly in the red during the Asian session. NZD endured similar price action to AUD, with no notable news. RBNZ Governor Orr’s speech today revolved around digital currencies, as per the topic, with no market moving information.