Aussie dollar strengthened slightly following stronger November building approvals. However, job advertisements came out weak. Revisions for both data were also softer. AudUsd, which traded low 0.7840’s, got a push above 0.7850. Hearsay offers ahead of 0.7900 from leveraged names, talk of speculative accounts building up short position. Downside is clean. Please note, there are some Aud2.5bn worth of options maturing Jan 12 between 0.7800 and 0.7815.
Kiwi was also slightly firmer and I do not have a reason why. Positioning index indicate that speculators are short Kiwi against Usd and the crosses. I do suspect someone or some people is adjusting position for stops above 0.7200.
Nothing much to pen about the boring single currency. Offered when EurJpy sold then flipped back to 1.1975 on UsdJpy sales. There is a decent 1.1985 option strike maturing today, for Eur2.3bn. I heard there are stop sell orders just beneath the low recorded on Dec 29.
Move in UsdJpy has dragged Usd/Asia along as well. However some EM traders are cautious because of central bank intervention.
USDCNY fixed at 6.4968, on high side of the range estimates.
A short-term view from our new EM trader Yee Tern on USD/AXJ: USD was firm yesterday started with the jump in UsdKrw and I have a feeling this short covering have legs to go but will be more pronounced in Usd/Asia pairs. One argument is the fwd/fwds are depressed LHS in the likes of UsdIdr, UsdPhp and UsdMyr and covering short USD is still not “expensive”. USDCNH traded decisively higher above psychological 6.5 this morning and the CNH curve feels bid across. Also, we are not too far from the downside support of 6.4902 which is the 200weekly MA.