CIBCFX FlowsAustralia’s Q4 inflation came out higher than expected, trimmed mean, measure watched by RBA, up 2.6%, above the RBA target midpoint of 2-3%. Our macro strategist Patrick expects the RBA could announce next week to end QE sometime middle of February. Patrick, along with market is looking for rate hike this year. RBA is far away from where the market expects, and there is fair and valid expectation that they must edge to somewhat closer to where pricing is – though very unlikely all the way. AUD$ obviously higher on the headline, but short-lived. Weak sentiment, YEN crosses sold and AUD$ reversed back towards 0.7150s. Intraday resistance noted at 0.7182, corporate demand should come in near 0.7130.And the $YEN declined, not much can be said to describe the action. It was Goto-bi Day and more sellers after the Tokyo fix sent the US dollar below 113.90. I was told that Japanese retail day traders have been taking profit from their long $YEN positions. These guys will return and top-up their longs below 113.40.EUR¥ was sold from the moment Tokyo guys sat down, the cross started from 129.13 and never looked back. There was light pressure on the EUR$. Chatter of bids from real money names below 1.1310, some are linked to option strikes at 1.1300 due this week total €2.6bn.Seriously, a birthday party? It is all over the media, Johnson held a party at No. 10 back in 2020. Don’t think he’ll quit over these parties, nevertheless, we will have to wait for Sue Gray’s report which is supposed to be released later this week. GBP$ traded on the weak side, nothing to do with Johnson but more so based on risk appetite and GBP¥ weakness.Small move lower in oil futures, March contracts moved away from $84.00 to end the morning mid-83s. $CAD obviously higher, we met some platform names hitting bids at the low, that was when AUD$ near the high. Light selling above 1.2660. Bank of Canada meets tomorrow, most consensus no change to rates at 0.25%.CitiEuropean OpenAsian traders came in to a volatile end to the NY session, which saw equities rebound to end in the green after a heavy rout earlier in the day. The DXY came down from the intraday highs during the NY session as well. Aggressive swings for stock markets continued during the Asian session with major indices all down over 1%, though given the magnitude of Monday’s moves, other assets classes have been relatively number to the effect. DXY, JPY crept just a touch higher, while NZD and NOK were the biggest losers on the G10 spectrum. The biggest story of the day were the hot CPI prints from AUD, which brings focus onto next week’s RBA, with Citi Economists now expecting a hike in August 2022. We also saw an unexpected inter-meeting hawkish twist for SGD as the MAS said it will raise slightly the appreciation of the S$NEER policy band.Looking ahead, USD will wait for the Conf. Board Consumer Confidence & Richmond Fed Manufact. Index at 15:00 GMT. SEK will wait for Prospera Swedish Inflation Expectations Survey at 07:00 GMT, while EUR will see German IFO data at 09:00 GMT. HUF will see a central bank decision, in which Citi Economics expect a hike of 30bps to 2.70%. MXN will see Economic Activity data at 12:00 GMT.
Source: Tickmill
