CIBCKey Headlines $YEN took out the crucial level 120.00, printed 120.08, high since Feb 2016. Questions raised if the BoJ will tolerate YEN weakness? Governor Kuroda spoke today, there was no mention of FX. Another question was will $YEN will pullback due to financial year-end. Weak consumer confidence out of New Zealand and Australia were weak but no impact on currencies. Both dominated by US$ sentiment. FX FlowsWeak consumer confidence out of New Zealand and Australia – Kiwi Q1 index is the lowest since GFC at 92.1 from 99.1, Aussie weekly confidence at 91.2 from 95.8. No impact on currencies, both have been stable. Interesting AU$ daily chart, 50-day and 100-day SMAs are both at 0.7215, there is a potential golden cross. Tokyo fixing demand for the $YEN had the AU$ and NZ$ tilting lower.$YEN picked up by Tokyo names at the open, one reporter said the demand is strong due to Japanese importers as their options’ hedge had been knocked out and also since Japan was closed yesterday, there could be fixing demand for Goto-bi. $YEN poked through 120.00, took out the crucial barrier, got to 120.08 then subsided. There are no nearby option strikes, believe the next barrier should be 120.50. Governor Kuroda reiterated it is still too early to discuss exit strategy. Some talk from traders if $YEN will pullback due to financial year-end. It could but importers will want to add to hedge. Japanese retail are short $YEN, will also look to cover back.Oil futures surged, April contract hit $114.33. Several media linked the price action because the European leaders failed to agree on Russian oil and gas sanctions. Germany argued it was too dependent on Russian supplies to impose an embargo. $CAD is caught between US$ and oil. Mild price action, little of note. Another thing is the death cross developed but not very convincing. We suspect there are demand out there from real money which is holding up $CAD.In the late New York, GC Rehn said ECB may begin to raise interest rates late this year or early next year, depending on how the economy develops; ECB should normalise policy without hurting growth. EUR$ started bid but started to back off as we approached the Tokyo fix. There were bids noted at 1.1010 which could be linked to the option strike worth €1.04bn. Bids again at 1.1000, it took quite a while to push through. Once done, EUR$ weakened to 1.0981. ECB speakers today, Guindos, Villeroy, Panetta Lagarde and Lane.
Source: Tickmill
