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CIBC
FX Flows
Spread for 10-year AU-NZ yields widened a little after market opened at 0.685 from 0.665, small pressure on the AUDNZD and eventually, took out the 1.04 barrier. We saw bids 1.0402-05 and I suspect someone pulled them, obviously someone had stops in either AUDNZD or NZDUSD. In nano-seconds, AUDNZD fell from 1.0397 to 1.0348, while the NZDUSD took off from 0.7011 to 0.7053. This is not news driven. Do note this is a 2-year low for AUDNZD, our trader Jon said it would be mad to be selling down here.
NZDUSD slipped back after a very quick move to 0.7053. We think this is all market positioning. Earlier, New Zealand July home-building permits rose 2.1%, we saw a higher revision in June to +4.0% from +3.8%. This had no impact on FX. IMM report showed that positioning is flat while Monday data showed leveraged names have turned to small short.
It has been a tight range for AUDUSD, speculators are trapped between AUD demand from corporate accounts linked to dividend payments and weakness in AUDNZD cross. Weak commodity prices plus soft Chinese PMIs didn’t help much.
EURUSD moved higher but it has been slow and steady. Some resistance seen at 1.1810, the 50-day SMA, I think we might get a chance later, break of that could see EUR heading to 1.1865. Earlier today, ECB Governing Council member Holzmann said 4th wave of the coronavirus will probably have marginal impact on economic output in Austria and sees inflation rate down again later this year and next. Our traders see the pair to range 1.1772-1.1822 for the session.
With AUD and oil futures are under pressure and the USDCAD goes bid. We also witnessed good demand in EURCAD from Canadian name. USDCAD kicked off at 1.2605, has risen to 1.2625. Offers are light, not much upside strikes too. Downside, strike at 1.2575 matures today for $660mio and 1.2560 for $1.22bn.
Credit Agricole
Month End
Global equity markets were broadly firmer in August. In FX, the USD was broadly stronger on the month. Overall, the moves in equity markets, when adjusted for market capitalisation and FX performance this month, suggest month-end portfolio-rebalancing flows are likely to be mild USD selling across the board with the strongest sell signal in the case of the USD vs SEK. n Our corporate flow model is pointing to EUR/USD selling at the end of the month. In our combined strategy, we therefore use the signals of the stand-alone month-end rebalancing model.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.