FX Flows

$YEN had a very brief visit to 126.965 early this morning, there was no headlines so we believe it was positioning in thin market. $YEN headed higher after Tokyo opened, yields of UST also gained. Good demand for the Tokyo fix sent the pair to 127.64. Activity slowed soon after, $YEN drifted lower. $YEN rose again into the Tokyo lunch hour.

We witnessed good two-way interests in $CAD before and after the Toronto closed. It was first paid up from 1.2825 up to 1.2833, likely to be linked to ETFs. Once that was over, the pair was sold down to 1.2805. Buying resumed out of North Asia and was again sold as we approach the Tokyo fix. We will have Canadian February payroll tonight plus CFIB business barometer, monthly GDP on Friday.

Australia Q1 inflation data was hot and is boosting a central bank election rate hike. Trimmed mean CPI rose 1.4% over the quarter and 3.7% over the year, our macro strategist said the case for RBA hiking is weak because inflation is clearly above target, wages data is sought and is an out for the Bank. Patrick believes RBA will move next week. The AFR said Q1 inflation was always expected to be high but today’s release exceeded all expectations, increasing breath of inflationary pressures and growing upstream disruptions in China means that May board meeting in play for rate hike. AU$ which has been climbing since the start jumped to 0.7171 on the data. There was no follow-through, back below 0.7150.

Will the EUR$ break 1.0600? Recycling of intervention US$ could help. Once that clears, traders will take aim for 1.0570, low of April 2017. Then again, put strike at 1.0600 rolls off today worth €1.41bn could prevent the move. A weaker could drive Eurozone inflation higher, which will come into focus this Friday. However, ECB’s cautious policy stance will appear more detached while the Fed is taking action to curb inflation.

$THB rally stalled at 34.35. Yesterday, BoT warned that it is closely monitoring the price action and is ready to take action if moves become volatile. Well, weaker THB due to Fed tightening, China’s lockdowns and dividend. I doubt aggressive actions, most likely, smoothing. Thai government confirmed that on May 1, fully vaccinated travellers to enter without having to quarantine and RT-PCR Covid-19 test upon arrival. Technically, 34.20 is the new support, stronger at 34.00. Topside 34.50.

Credit Agricole

Asia Overnight

Weak US technology stock earnings and the ramping of energy supply tensions in the EU weighed on sentiment in Asian trading. In a warning shot to the rest of the EU, Russia has cut off gas supplies to Poland and Bulgaria, which refused to meet Russia’s demand to pay for gas in RUB. Providing sentiment with some relief was a pledge by China to ramp up infrastructure construction spending in order to help support its economy. HK and China bourses bucked the general trend in Asia on rallies, but the rest of Asian equities were trading in the red at the time of writing. S&P 500 futures were trading higher at the time of writing. Strong Australian inflation data and modest risk-on trading in G10 FX led to the AUD outperforming and the JPY underperforming during the Asian session.