CIBC

FX Flows

The RBNZ said it is to proceed with the proposal to tighten mortgage lending to control the inflated housing market. From November 1, RBNZ will be restricting amount lending banks can do an LVR of 80% to 10% down from 20%. Not much for the FX space, NZDUSD held under 0.7000. There is a short-term support at 0.6993, which gave way. Not much in terms of data, we will have August trade data out tomorrow.

Despite the mood, AUDUSD declined, think it was more of a FOMC-thing. Intraday support comes in at 0.7222, level that has held well since August 27. Large strike at 0.7240 expires today worth about AUD1.13bn. No economic data due tomorrow.

USDJPY few ticks higher, at 109.92. Japanese retail day traders have booked some profit, not all, which means we could see this bit higher. First resistance is 110.08 then 110.17.

I suspect that someone sold NZDCAD which forced the USDCAD to come off from 1.2795 to 1.2780. It could have been oil futures as well, Nov contract rose to $72.42. By end of morning, spot USDCAD is back to Toronto close. Not much in terms of flows, guess it is all about positioning.

Who said what

  • Evergrande Group USD bonds and shares climbed, share price up 32% at one point and 2022 USD note up 4.7 cents.
  • Evergrande’s Hui: Only by fully resuming projects construction and sales can Evergrande ensure home buyers’ rights, investment products repayment and borrowing repayment; will ensure repayment of investment products based on earlier announced plans
  • Major Evergrande backer, Chinese Estates sold 108.9mio of Evergrande shares; the firm said it could take a loss of about HKD9.5bn.
  • RBNZ: To tighten LVR restrictions; from November 1 2021, will be restricting amount lending banks can do an LVR of 80% to 10% down from 20%
  • Brazil Central Bank: Raises benchmark lending by 100 bps to 6.25%; decision was unanimous; rate hike of 100 bps at next meeting; base outlook is to have restrictive rates

Credit Agricole

Asia overnight:

Subdued UST long-end yields following the Fed meeting and news that the Chinese government is looking to restructure residential property developer, Evergrande, boosted sentiment in the Asian session. Most Asian bourses and S&P500 futures were trading higher at the time of writing. G10 FX was more sensitive to higher US yields than equity markets. The Antipodean currencies and CAD were the underperformers during the session and the EUR the outperformer.