CIBCFX FlowsCurrencies were locked in narrow ranges, the only pair that had better trading range was the $CAD. The pair was sold into the North America closing minutes, believed to be linked to ETFs. WTI Crude March futures began the session weak, contracts dipped briefly below $87.00 and bounced back to $87.28, this helped accelerate $CAD move towards 1.2713. There was also a talk that leveraged accounts sold the USD. Total of $750mio option strikes around 1.2695 and 1.2700. Nothing in terms of economic data release today.NZD¥ faced resistance above 76.00, this limited NZD$ recovery. The cross took out 75.75 but only went as much 75.65. As said, leveraged names will probably look to sell above 76.00. NZD$ rose to 0.65855, light offers seen above 0.6590. I see limited downside option strikes, suspect market is not well positioned.Rest of the currencies had little or no action, talk of $YEN offers close to 115.50, could be linked to a USD call which expires today for $1.77bn. Downside strike 115.00 also due today for $1.35bn. Japanese retail day traders as I said yesterday have now positioned short $YEN. They will continue to do so up to 116.00.CitiEuropean OpenAfter the NY session saw equities pare gains into the close and OIS markets pricing in almost 30bps of Fed rate hikes by March, the Asian markets were quiet on the Friday prior to the Chinese Golden Week. DXY was slightly lower, while the UST curve mildly bear-flattened. The g10 complex was mixed against the dollar with no notable moves. We note that early in the Asian session, there were negative geopolitical headlines from unconfirmed reports on Bloomberg concerning Biden’s comments on Russia and Ukraine. We note, however, that there were subsequent comments claiming that these reports were not true. Nevertheless, we remain alert for any geopolitical developments as headline risk remains live.Looking ahead, the US will look forward to Employment cost index and the PCE core deflator at 13:30 GMT, as well as the final prints for the University of Michigan inflation expectations at 15:00 GMT. While we don’t usually look to final prints, we note that there is upside risk to this reading on the back of rising energy prices. Meanwhile, SEK sees some second-tier data n the form of unemployment figures for December at 07:00 GMT, while EUR will see French GDP and Eurozone economist sentiment data at 10:00 GMT. HKD will see GDP at 08:30 GMT, BRL an inflation print at 11:00 GMT and COP a rate decision at 18:00 GMT, where our economists expect a 75bps hike to 3.75%.
Source: Tickmill
