CIBC
FX Flows
How things have changed? Growing number of economists said they see Fed hiking 75 bps this week. In the podcast with Ian Pollick, our economist Andrew Grantham said we will be looking at the odd type of recession which he believes could transpire if rates are risen too high.
$YEN started off weak, Japanese Finance Minister Suzuki expressed concern about the recent YEN weakness and said will take appropriate steps on FX if needed. $YEN found a base at 133.88. BoJ ramped up 5-yeat to 10-year JGB purchases. BoJ increased to ¥800bn from ¥500bn. Yield of 30-year JGB reached 1.27%, steepening the curve. $YEN firmed up after BoJ operation. BoJ meeting this week should be interesting, no change expected but will FX be on the agenda? Expect to see buyers on dips, the Japanese retail guys have held back their selling, not added to shorts and they will be watching the pullback.
Several media have reported that European Union will launch three separate lawsuits against Britain after the Government published plans to override the Northern Ireland Protocol.
I do suspect there are buyers at and below 1.0400 in EUR$. Unfortunately, we do not see any bids planted in EBS. Large option strikes for today, €1bn at 1.0413 and €2.34bn at 1.0425. Guess we are not going anywhere.
Credit Agricole
Asia overnight
The bleeding of equity markets stopped a little in Asia. While Asian bourses were trading lower at the time of writing, S&P500 futures were trading solidly in the green. The plunge in US equities in the North American session appears to have brought out some bargain hunters. The bounce in S&P500 futures drove G10 FX and led to the USD underperforming during the Asian session. The AUD and GBP were the largest beneficiaries of the weaker USD. The JPY also weakened during the Asian session.
Citi
European Open
Markets were rocked by a WSJ article during the NY session suggesting that the Fed is likely to consider a 75bps hike during the FOMC decision tomorrow. OIS markets have now priced in almost 70bps of hikes for both the June and July FOMC meetings, while equities plunged lower over the NY session, sealing in a bear market. US yields climbed higher, while USD remained king. The Asian session saw what seems to be dip buyers emerge, with a little of yesterday’s moves being retraced. High beta currencies fared better today, and dollar was in the red. The main focus in Asia was the BoJ offer to increase JGB buys tomorrow. JPY briefly ticked lower before paring losses to trade somewhat flat. Meanwhile USDCNH broke through a support level to trade lower.
Ahead, the US will sight PPI data. SEK and ARS look towards CPI, while GBP will eye their jobs and unemployment report. Focus today, however, will likely remain on Germany ZEW expectations and current situation at 10:00 BST.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.