CIBC

FX Flows

Upon the official Monday open, USD sharply higher followingthe weekend’s headlines. EUR$ which ended at 1.1268, opened at 1.1200 and wassent down to 1.1122. $YEN closed on Friday 115.55, opened at 115.10/30 got to114.95 and is now coming back higher, guess there are some demand formonth-end. GBP$ closed 1.34105, opened at 1.3365 and got down to 1.33095. $CHFwas at 0.9256 last Friday opened higher at 0.9289 and traded down to 0.9230, ithas bounced back to 0.9288. AU$ closed at 0.7237, kicked off at 0.7205, whichwas the session’s high. NZ$ also lower, opened at 0.6702 versus last Friday’s0.6744, got down to 0.66565. $CAD closed at 1.2713, opened up at 1.2750, got upto 1.2792.

There was a brief bout of $YEN and €YEN buying as we approached official Asia open, $YEN rose to 115.80 very quickly from 115.20s. No one could explain why, we believed it is month-end demand amid poor liquidity.

Market calmed, lack of clear vision, plenty of headlines but nothing concrete, $YEN drifted and slipped into tighter range. There are decent option strikes expiring today, total of about $1.2bn 115.38-40, near $1bn further upside 116.75.

EUR$ tried to recover but just could not get to 1.1200. Even with the demand in €YEN, the single currency struggled to past 1.1190. Last week, we witnessed very strong demand for EUR$ beneath 1.1150, I believe there are some around 1.1100, could be a barrier protection, market would need to take out 1.1106 to target 1.1050 and 1.1000.

For the Australian dollar, it is risk-off versus corporate demand. Officially opened at 0.7205, AUD$ got down to 0.7152, it has not been able to reverse up to 0.7200. Weak risk sentiment has capped the AUD$ but corporate buying has been slowly soaking up supply. There was an article in AFR on Sunday, that the Ukraine situation has increased the inflation risks, it now makes even less sense for the RBA to maintain its wait and see policy before lifting interest rates. The central bank will meet tomorrow, decision out at 11.30 am Hong Kong, no change expected, however, rate rises aren’t urgent, but a shift in the RBA’s rhetoric and communications strategy certainly is.

Citi

European Open

An eventful weekend saw markets furiously risk-off at open, following the announcement of more restrictive economic measures against Russia. USD soared 0.82%, while offshore USDRUB rocketed by up to 40%. SEK and NOK led losses in G10, while C3 currencies were over 2% lower. UST bull steepened and equities were down, with S&P eminis down over 2%. The predominant themes, however, were rising energy prices as well as liquidity risk. Elsewhere, we saw RBNZ’s Hawkesby and Ha speak about inflation and tightening, although markets were more focused on the geopolitical developments.

Looking ahead, we note that US President Biden is due to speak with allies at 16:15 GMT. Meanwhile, in scheduled events, USD will see Fedspeak from Bostic (15.30 GMT), while EUR see’s ECB’s Panetta at 11:30 GMT. SEK sees a multitude of economic data at 07:00 GMT. TRY and INR see GDP at 07:00 GMT and 12:00 GMT respectively.