CIBC

FX Flows

For the first time in a long while that the $YEN felt heavy. AU$ is bid, thanks to dividend payment. Softer clawed back early gains.At about 6.20 am Hong Kong this morning, $YEN started to tick higher, we think these are Japanese margin trading houses cutting positions of the retail clients. Later, said to be importers, we saw another leg higher, we met platform names lifting $YEN. Buying got aggressive up to 129.40. $YEN backed away, however, being Goto-bi Day, $YEN made another move higher, this time 129.43 for the fix. And the fun began, that could give someone a cardiac arrest. $YEN had a sudden move to 128.88, BoJ announced it will buy unlimited amount of JGBs at fixed rate, $YEN jumped back to 129.345. Japan Deputy Cabinet Sec Isozaki talked about the weak YEN, will coordinate with US and other currency authorities, $YEN fell and fell.

With big dividend due tomorrow, AU$ was firm all morning until release of the Chinese lending rate. It fell from 0.7394 to 0.7373. Rumour of corporate bids below 0.7350 and this payment due tomorrow put the pair back to square one, even surfaced above 0.7400 despite the CNH weak. Lower $YEN boosted the AU$ to 0.7414. Small option strikes 0.7400-0.7415 roll off today, nothing drama.

EUR$ and GBP$ rose on weaker US$, there has little interest to be honest, market was focused on the YEN and AU$. I mentioned yesterday that we encountered consistent buying below 1.0770, it felt like leveraged funds were covering short positions and gamma play as well. I am sure they are still there. EUR$ back onto 1.0800, no mad rush, there will be selling interests from those reducing long positions established last week.

$CAD moved lower in line with higher AU$. Think Bipan has nailed it, this is still a 124-1.27 range. Option strikes at 1.2600 and 1.2575 mature today for about $500mio each. Canadian March CPI out today, month-on-month estimates +0.9% from +1%and annually up 6.1% from 5.7%.

Citi

European Open

JPY is on track to snap the 13-day falling streak as increased nervousness around verbal intervention, pockets of real money selling and speculation around an impending bilateral meeting between Treasury Secretary Yellen and her Japanese counterpart combine to provide a modest lift. Spot desk flags continued poor liquidity and rising market nervousness as we probe closer to 130. BoJ steps in again to cap JGB yields. Activity in G10 is well above normal with USD feeling fresh selling pressure, as Tuesday’s rally unwinds. CNH saw vols bid and huge volumes in spot following overnight selloff, weakness extended initially after a weaker fix, before erasing the loss amid corporate demand.

Expect focus to turn to French presidential election TV debate, which may prove pivotal for the close run vote on April 24. We see additional US housing data on the heels of Tuesday’s release highlighting a strong US housing market in March, followed by more Fedspeak from Daly, Evans and Bostic. ZAR, CAD, and NZD prepare for inflation data, while export order figures are due from TWD.