CIBC

Key Headlines

  • Dip-cott - PM Morrison said Australia won’t send government officials to Beijing Winter Olympics however, Australian athletes will still attend Olympics. Britain is considering approving limited government attendance at the Beijing Olympics, short of full-on diplomatic boycott. Deputy PM Raab said he will not be attending. New Zealand said it is not sending any officials to Olympics but that is due to Covid and not political.
  • FT posted a story that Chinese regulators are preparing a blacklist to tighten restrictions on tech companies. Alibaba shares fell more than 4.4% at time of writing.

FX Flows

Good selling of $Yen after the open out of Japan took the US$ from 113.54 to 113.37. It then bounced back with strong demand for the Tokyo fix. $Yen has been steady since, buying of Yen crosses seen in the mid-morning spurred by onshore $CNY trading lower. There are good option strikes on sides due tomorrow, biggest strike is 114.10 USD call for $1.8bn.

€Yen bought lifted EUR$ towards 1.1290s. Usual rumour of offers at 1.1310-20 and bids at 1.1260. Take note that there are decent option strikes maturing Monday December 13. €1.5bn at 1.1320, €950mio at 1.1250.

AUD$ is also firmer as the AUD¥ returned onto 81-handle and AUDNZD onto 1.05-handle. AUD$ resistance seen at 0.7170, very little talk about the downside, think corporate bids kick in under 0.7100.

Bank of Canada meets today, no change expected. The Bank can offer up an even more positive outlook, and signal rate hikes are coming, but the language surrounding that forecast should sound much less certain until we have more information about that mutated elephant in the room, which is omicron. $CAD drifted lower, not much seen downside.

Citi

European Open

A quiet day gained speed towards the European open, with the main theme being dollar weakness. The rest of the G10 currencies mainly strengthened against the greenback, with CAD being the exception, sliding 0.03% ahead of the BoC rate decision today. Overnight, we had the US-Russia summit conclude, with noteworthy headlines about Biden voicing concerns around Ukraine. In Asia, RBI kept both its repo and reverse repo rates unchanged. One third of Bloomberg survey respondents had predicted a hike in the latter, which caused INR to be the biggest loser (-0.09%) in the Asian FX complex on the announcement. THB leads the Asian currencies, trading 0.58% higher, with KRW and MYR also ticking slightly higher.

Today, USD will see a JOLTS Job Openings data (15:00 GMT). We also note a Bank of Canada Rate Decision (15:00 GMT), where Citi Economics expect no change. PLN will also see a base rate announcement, where Citi Economics expect a 50bps hike to 1.75%. Following the theme of central bank decisions, BRL will first see a retail sales print (12:00 GMT), followed by the Selic rate decision (21:30 GMT). Citi Economics expect a hike of 150bps to 9.25%. We see CPI prints for HUF (08:00 GMT) and RUB (16:00 GMT).