Credit Agricole

Asia overnight

A modest retreat in UST yields and Chinese policymakers’ actions to shore up the economy helped sentiment recover a little during the Asian session. Newswires reported that Chinese regulators are considering allowing property developers to use certain funds from presold properties to help ease a liquidity crunch. The PBoC also cut lending rates, albeit by slightly less than expected by the market. Most Asian bourses and S&P 500 futures were trading higher at the time of writing. In G10 FX, the AUD was the outperformer during the Asian session on the back of strong Australian labour market data, and the NZD and JPY were the underperformers. The NZD was weighed down by AUD/NZD buying following the Australian labour market data.


FX Flows

Surprisingly, $YEN traded lower from the open, some said the move was initiated by lower UST yields which were also lower from the open. The pair got to 114.025, heard that Japanese retail sector were reloading long USD. I also believe that importers who had their call options knocked out will be looking to buy USD on dips. It will be interesting to see if $YEN can break clear of this 114-115 range. Maybe not.

Selling of USD ushered EUR$ higher, pullback in AUD$ dragged the EUR$ along. Activity slowed down, decent option strikes due today on the downside - €1.1bnn at 1.1350, €630mio at 1.1345, more than €2.9bn between 1.1300 and 1.1315.


European Open

The market was slightly choppy today, although USD was mostly flat. AUD saw a blockbuster jobs report support it initially, although gains faded as we headed to the European open. China delivered o its well-telegraphed LPR rate cuts, while NZD was down on the day. NOK was up ahead of the rate decision today. THB, initially stronger against the dollar, also lost ground. As expected, Thailand did announce a plan to reinstate quarantine-free travel rules today

A packed day of rate decisions awaits us today. We start with the MYR decision at 07:00 GMT, followed by the IDR decision at 07:20 GMT. Both expect no change to their key rates. NOK will se eits deposit rate decision at 09:00 GMT, where we expect no change as well. HUF will see the one-week deposit rate decision, where markets are expecting a 5bp hike to 4.05%. TRY’s decision comes up next at 11:00 GMT where no change is expected, while a 50bps hike is expected in UAH at 12:00 GMT.

In other data, the US will see Initial Jobless & Continuing Claims at 13:30 GMT and ECB will Publish Account of December 2021 Policy Meeting at 12:30 GMT. TWD sees export data at 08:00 GMT while HKD sees CPI at 08:30 GMT. Lastly MXN sees an unemployment rate print at 12:00 GMT.