CitiEuropean OpenA relatively quiet morning in Asia that saw DXY slightly lower after continuing its grind higher post the European close. UST yields were down in Asian trading by a tad as well, following yesterday’s spike in yields following Bullard’s comments yesterday. G10 currencies were stronger against the dollar generally, while equity markets remained volatile. Oil dipped slightly following the gains we saw during the NY session. Overnight, we saw Ukraine’s State Department spokesperson walk back on Ukrainian President Zelenskiy’s Facebook post that included attack-date comments. Australia saw the release of RBA minutes that had little new to offer. However, AUD was down a tad in the Asian session following a 10% drop in iron ore prices on SGX, as Beijing reportedly intensified efforts to rein prices in. PBoC held its MLF rate but increased loan size, which we take to be a sign of modest continuation of easing.Looking ahead, we remain sensitive to geopolitical noise. USD sees second tier data in the form of Empire Manufacturing and PPI at 13:30 GMT. NOK sees trade balance at 07:00 GMT, SEK sees Floden speak at 07:00 GMT, followed by Ingves at 15:30 GMT. GBP will see Earnings and Jobs reports at 07:00 GMT, while EUR sees s multitude of economic health prints at 10:00 GMT. CAD will receive Existing Home Sales data at 14:00 GMT. In the EM space, PLN sees GDP and CPI YoY at 09:00 GMT, BRL an inflation print at 11:00 GMT and COP a GDP print at 16:00 GMT. ILS sees CPI at 16:30 GMT, while ARS will see its CPI at 19:00 GMT.USD and the focus on FOMCUSD tapered lower in Asian trading after rising in the NY session following Bullard’s comments yesterday, as well as Russia-Ukraine geopolitical tensions. G10 currencies were generally up against the dollar, although high beta currencies lagged. In terms of UST, we saw yields modestly down across the curve. This is after 2y yields ran hot in the NY session yesterday following Bullard’s comments.CIBCFX FlowsForget about the UST yields, forget about Goto-bi Day. $YEN was heavy this morning, we saw small buying post-Tokyo fix but failed to change the momentum. $YEN remain offered for the rest of the day. Japanese retail traders have not scaled back their short $YEN, they are probably waiting for test below 115.00. Leveraged accounts have been long will likely sell towards 115.80-116.00. Option strikes due today are 116.00 for $1.15bn, $800mio at 115.75, total of $680mio 115.45-50. Japan will publish initial reading for Q4 GDP this morning, won’t impact FX.Nothing much to add in the RBA minutes, stressing patience as previously. It said pickup in wage growth likely to be only gradual. AUD$ did little, it was offered then returned to the top of day’s range. Event risk will lie on the January labour report on Thursday February 17, market is expecting zero employment change, this will be interesting.Fed/ECB policy divergence but no one bothers about that in Asia. It is all about supply and demand. Speculators, who went long EUR$ after Lagarde’s presser on February 3, are hedging downside risk, bought EUR puts, quite a few of 1.1300 put strikes transacted, according to DTCC. Hearsay, real money left fresh bids are talked about below 1.1300, expect some offers above linked to option strikes at 1.1340 and 1.1350, for about €1.35bn. Better strikes matures tomorrow. BDF Governor Francois Villeroy will speak today on monetary policy at London School of Economics.Another rough morning for iron ore futures, futures on the Dalian Exchange down more than 6.1% while contracts on SGX -10%.Little to talk about in terms of $CAD, paying no attention to the AUD nor commodity prices. Definitely strong resistance around 1.2780-1.2800, large option strikes due today mostly downside, about $2.4bn of strikes 1.2700 and 1.2695. Release of January’s Canadian housing starts today, the pace eased sharply in December, and could have slowed further to a 210K pace in January, from 236K in the prior month.
Source: Tickmill
