EUR crosses/EUR/USD/Open/Wrap

Quick overview of Asian FX market

  • Fairly quiet in Asia ahead of long weekend in the US:
  • Nikkei +1%, Hang Seng +0.6%; Gold $1731/oz:
  • HSBC China flash PMI improves 0.9 of a point to 50.4, showing mild expansion in the manufacturing sector:
  • EUR/USD targeted and triggered trailing stops above 1.2850 and has been quiet since then:
  • EUR/JPY stalled at weekly trendline resistance near 106.20 and retraced:
  • AUD popped up 15 pips after the China PMI data but has also retraced:
  • Only topic of note was positional adjustment ahead of the US Thanksgiving holiday.
  1. That’s right Maji, very quiet from them really for last 6 months. Gold reserve data overnight showed Brazil and Turkey are still big buyers. I usually hear when there are Sovereign orders in Gold but have heard nothing in last few weeks.

  2. An interesting note from Reuters regarding low volatility in the FX market:
    “Apart from JPY, traders and structurers are still grappling with a world of superlow vols. Here’s a rundown of what’s going on: 1) Very low realised vols 2) Willing sellers of vol on any rise on top of existing vol selling from structured products 3) Earlier sovereign selling of EUR/USD vols via dual currency deposits containing ranges and reducing vol elsewhere  4)  Not much leverage in FX trading, perhaps due to Dodd-Frank/greater regulation and global investment banks shrinking, hence the weak volumes 5) Interventionist central banks diversifying, such as the SNB buying AUD, CAD, NOK, also serve to damp volatility because there is a big, eager buyer on any drop and 6) The QE/low rate regime has reduced interest rate vol and also impacted FX (rate spreads not what they used to be).”

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