Credit Agricole

Asia overnight

Investors remain nervous ahead of the US inflation data later this week. Sentiment is being supported a little by news that Pfizer could have an omicron-variant[1]specific vaccine for Covid by March. A potential peak in omicron infections in New York is also helping support sentiment as the peak would be about a month after the city’s initial contact with the virus and would be consistent with South Africa’s experience. Most Asian bourses were trading lower and S&P500 futures slightly in the red at the time of writing. G10 FX traded in a more risk-on fashion, however, with the AUD and NOK the outperformers; the former on the back of strong Australian retail sales data. The JPY and USD were the underperformers during the Asian session.

Citi

European Open

Oil and high-beta currencies were higher on the Asian morning, while equities were seen to be flat. DXY ticked lower, while UST yields flattened, led by front end yields moving higher a tad. This follows the slight risk off tone in the NY session which saw equities sell off and then subsequently make a comeback. AUD saw bumper retail sales, while JGB futures continued their slide. Meanwhile, we saw constructive headlines from the US-Russia talks, as we head into another two rounds of talks this week.

The highlight of the day will undoubtedly be the Senate Banking Committee hearing on Powell’s Nomination at 15:00 GMT. While we expect Powell to be nominated, the attention will be on the Fed’s orientation in light of the recent expectations on policy normalization. Similarly, the Fedspeak from George (14:30 GMT) and Bullard (21:00 GMT) will also be closely watched. EUR will see the Germany Bundesbank Handover Ceremony at 10:00 GMT, although we see limited market risk. In the EM space, TRY will see a CA balance at 07:00 GMT, MXN an IP at 12:00 GMT and BRL an inflation print at 12:00 GMT.

CIBC

FX Flows

Fixing demand over the Tokyo fix for $YEN and YEN-crosses carried the USD onto 115.30’s. Rumour that leveraged accounts have been reducing long positions over the last few sessions, suspect they will fade the rally. Also, there are some $2.6bn worth of 115.50 option strikes due this week. Japanese retail day traders on the other hand, is covering back short $YEN. There is an option strike at 115.00 total $2.3bn due this week, suspect there are stops under 114.95.

YEN-cross steered commodity currencies higher. AUD$ rose from 0.7171 to high of 0.7189, move up has been orderly. Talk of offers at 0.7200 linked to option strikes rolling off this week, total A$1.25bn with A$786mio due today.

EUR¥ led EUR$ higher, volume has been light. Positioning has been mixed and I think it is balanced, leveraged accounts are short while IMM type are long. Offers should kick in above 1.1380, while bids linked near 1.1310.

Bets on short GBP$ have reduced, I read from one report that leveraged names scaled back short GBP$. Light selling near 1.3600, should see stop buy orders thereafter 1.3615.