As FX markets opened overnight USDCHF and EURCHF dived to trigger stops to the downside in thin liquidity to 0.8034 and 1.1365 respectively before recovering into the main Asian session.
New Zealand Q2 CPI was higher than expected at 1.0%qq (vs 0.8% exp), helping NZDUSD jump from 0.8450 to 0.8490. With NZD bills down 7-10 ticks across the curve and AUD bills higher again following the release from another bank forecasting rate cuts starting in December and throughout next year, AUDNZD slumped from above 1.2600 to 1.2545.
As Asia got into full swing S&P futures drifted lower to -0.7% and USD/Asia opened better bid, helping the dollar firmer across the board. There seemed to be no individual trigger for the move, but the bearish Euro FT article speculating that default is the only way out now and the Washington Post releasing another that seems like an agreement in the US for $1.5trn of spending cuts should help the debt ceiling issue could be seen to have given the USD a lift. EURUSD came under further pressure after we broke the 1.4090 Friday lows, with sellers emerging to force the pair to 1.4052 before bouncing and stalling into a quiet few hours.
USD/Asia run
USDKRW 1060.0 (Thursday morning mids 1061)
USDINR 44.70 (44.68)
USDPHP 43.03 (43.01)
USDCNY1y 6.3925 (6.3935)
USDIDR 8560 (8555)
USDMYR 3.0075(3.0090)
USDTWD 28.86 (28.815)
USDSGD 1.2165 (1.2182)
HSBC Global Research