Global Markets: 

  • Asian stock markets: Nikkei down 0.10 %, Shanghai Composite up 0.20 %, ASX rose 0.15 %, Hang Seng unchanged on the day
  • Commodities: Gold at $1284, Silver at $19.46, Crude Oil at $93.91
  • Rates: US 10 year yield at 2.39
  • News & Data: 
  • Australia Construction Work Done -1.2 %, Expected: -0.3 %, Previous: -0.4 %

FX Overview: 

  • AUDAUD/USD started the day at 0.9305. The pair rose to a high of 0.9320, but ran into supply from leveraged names there, which led to a dip back to 0.9308. While AUD/NZD declined overnight on broad NZD strength, overall cross flows remain AUD-supportive with dealers seeing continued demand for AUD/JPY from Japanese names and speculators selling EUR/AUD. Further consolidation in the near-term with a slightly bid tone seems likely for the AUD/USD, as long as the carry trade remains attractive.
  • CAD – USD/CAD has been under pressure throughout yesterday’s EU and US trading session and it continued to trade with an offered tone during Asia. The pair fell from 1.0950 to 1.0930 at the Tokyo open and eventually hit a low of 1.0917. Traders see the EUR/CAD flows as the reason behind the CAD strength in Asia. Bids from corporate names reported at 1.09 and leveraged funds have better demand around 1.0880. Plenty of trailing stops are resting sub-1.09. To the topside, key intraday resistance lies at 1.0960 and 1.0995. It is worth noting that there are two very big option expiries for today’s NY cut: $1.6 billion at 1.10 and $1 billion at 1.1025.
  • CHF – Keep an eye on EUR/CHF as it fell back sub-1.2080. Specs have bids resting at 1.2070 and there were rumors of CB bids at 1.2060.
  • EUR – EUR/USD posted a fresh one-year low overnight, almost reaching 1.3150. Option-related demand ahead of the level prevented a further decline, but a break below seems imminent. Stops are resting through 1.3145 and there is not much tech support until 1.31. To the topside, offers have been lowered to 1.3180-85 and 1.32. Topside stops through 1.3210 and 1.3230. EUR is under pressure from cross flows as well as traders are using it as funding currency for carry trades.
  • JPY – USD/JPY continues to consolidate in a small range, despite good US econ data releases yesterday. Banks are reporting solid demand from locals and specs towards 103.75/80, while offers are resting pre-104.20. Stops above 104.25 in good size.

Upcoming Events: 

  • 06:00 GMT – German GfK Consumer Climate (9.0)
  • 08:00 GMT – Italian Consumer Confidence (104.0)