CIBCFX FLOWSFixing demand for $YEN but was subsequently sold by Japanese, believed to be the usual exporters. I also learned that the retail sector was also selling, adding to short USD positions. Japanese names also sold EUR¥ which has gotten several specs bullish. $YEN stayed under pressure, 10-year UST yields closed 1.96% over in North America slipped to 1.94%. Part of the $YEN move was also associated with today’s Rinban operations, there were speculations that BoJ may not tolerate the higher yields but the central bank chose not to deviate. The retail day traders will probably look to cover some shorts beneath 115.20, resell above 115.50.Will the RBA raise interest rates before ECB? Well, many seemed to think so. Westpac does not expect the first rate hike by the RBA until August, ANZ sees September, while CBA predicts August. Price action of the UST yields puts the AUD$ higher. Intraday resistance at 0.7173, 50-day SMA at 0.7165. AUD¥ is looking rather bullish, first target 82.97.EUR$ moved up as the $YEN declined. I was told that fresh offers leaning above 1.1450. Speaking to some macro names, speculators rushed into EUR$ last week post-Lagarde, many sought to buying topside EUR call strikes, even digitals. Many of them expects gamma play from 1.1450 to 1.1500. I mentioned yesterday there are bids scattered below 1.1420, not sure till where but hearsay stop sell below 1.1390. Tomorrow’s CPI is likely catalyst for the EUR$ and Fed rate hike expectations. Nothing much in today’s option expiry, there are couple due tomorrow and European Commission will be publishing Economic Forecasts as well.Nothing much to look at in partygate, getting kind of boring. The Telegraph wrote senior Scottish Tories want a vote of no confidence in Boris Johnson as soon as possible amid fears that voter anger over “partygate” will become “normalised” if he clings on. I doubt we will get anywhere. GBP$ moved mildly higher and it more so, USD story.Loonie strengthened this morning even though oil futures steady. It could be driven by US-CA yield spreads. Small bids on the downside, should get better towards 1.2650 where $2.7bn worth of option strikes mature on Friday. BoC Governor Macklem will be speaking at 12.00 ET at the Canadian Chamber of Commerce, Canada 360° Economic Summit.CitiEuropean OpenMarkets were relatively calm following the European close yesterday, with DXY down a tad in Asian trading, major equity futures up slightly and oil prices flat. UST opened higher, supported by good price action in Aussie bonds. Early in the Asian session, we saw the Fed’s Daly (among the more dovish of the Fed members) reaffirming her stance which suggests that a 50bps increase is off the table for her regardless of the outcome of the CPI print this Thursday. Markets are pricing in 32bps of rate hikes for the Fed in March. Markets continue to watch inflation prints and central bank speak of late with hawkish prospects top of mind.Looking ahead, we will see more Fedspeak from Bowman at 15:30 GMT and Mester at 17:00 GMT, with both noted to be slightly hawkish in the past. Along the same theme, BoE sees Huw Pill speaks at 13:10 GMT, where we expect further push-back of hawkish market pricing. CAD will see BoC’s Macklem at 17:00 GMT, where we will look to clues to reaffirm that rate hikes are imminent. EUR sees Germany Trade Balance at 07:00 GMT and Italy Industrial Production MoM at 09:00 GMT. On the EM front, THB sees a rate decision at 07:00 GMT, where we expect no change. RON will see a rate decision (time unknown), where we expect a 25bps hike to 2.25%. MXN sees CPI at 12:00 GMT, while BRL will eye inflation data and Core retail sales data. HUF will eye Central bank minutes following last week’s larger than expected hike at 13:00 GMT.
Source: Tickmill
