CIBC

FX Flows

Ready, Steady, Go! Position unwinding kicked off the Asian session. $YEN had a quick move lower, this was accompanied by AUD¥. $YEN fell to 127.35 before bounce back to 127.58 for the Tokyo fix. Japanese Finance Minister confirmed that the media report about Japan-US joint intervention is fake news. Well, nothing new, MoF had already made this claim on Saturday. One commentary noted that the pair needs to close below 127.20 in order for better correction, paving for 125.00. Activity calmed down and eyes turned to offshore $CNH.

PBoC pledged to increase support for the real economy, will step up the prudent monetary policy, will add Y100bn relending quota for coal mining and storage. That didn’t help, onshore opened up higher and $CNH jumped from 6.5880 to 6.6100. Madness, crazy, the wild move lasted 3-plus minutes, then slowed down. Onshore $CNY moved below 6.55 and dragged the $CNH along.

With sale of AU$¥ earlier, AU$ slipped to 0.7170. But that reversed as we got close to the Tokyo fix. Most of the session the pair stayed in the 0.7180s, moved higher with recovery in Chinese stock market. Iron ore prices still weak, Dalian futures fell more than 2.5%. Fresh offers said to stack up above 0.7220 and more into 0.7240s. Move up onto 0.72-handle follows the move down in $CNH. Market will be keeping a close eye on the Q1 CPI out on Wednesday April 27. Forecasts for another robust set of numbers, putting pressure on RBA to act. Most economists see RBA hiking in June, there was one forecaster calling for hike in May which we doubt so because of elections. Furthermore, there is another risk, weaker growth in China due to continued lockdowns.

EUR$ rose amid softer $YEN, felt as though fresh bids have been replenish below 1.0710. They could be linked to the €4.7bn worth of EUR put strikes at 1.0700 due this week. Will be hearing from de Cos and Villeroy later today.

Oil futures have been stable and so is the CAD. Weak stops noted above 1.2790 then sellers reappear higher. About $750mio of 1.2785 US$ call strikes will roll off today. No Canadian data out today.

Citi

European Open

G10 has continued to revolve around China growth outlook with CNH rallying after new PBoC policy commitments proved a welcome boost for domestic stock markets. China-sensitive FX followed suit with AUD, NZD outperforming while rising oil prices buoyed oil-linked currencies. Risk assets felt tailwind with global stocks broadly supported and USD slipped leading USD Asia lower, while PHP was boosted by hawkish central bank comments. Treasuries back under pressure.

Focus remains on central bankers as EUR sees de Cos and Villeroy scheduled to appear while HUF is expected benefit from a 100bps rate hike. We look for an improvement in labor markets for PLN and consumer confidence data for USD.