1) Overnight Asia Wrap
A quiet start to the day in Asia with the market hanging on the some aggressive moves by the FOMC tonight and expectation that Greece will receive its next tranche of aid amid progress on Greek talks. EURUSD opened at 1.3701 falling briefly to 1.3679 before moving higher to 1.3724. Cable was relatively static in a 1.5726-47 range with EURGBBP edging higher from early lows of 0.8698 to 0.8722.
USDJPY continued on a soft tone despite intervention fears which led to a very brief spike to 76.86 from 76.11, before falling back again to 76.28. EURJPY was taken to hit highs of 105.21 on the dollar spike. AUD fell to 1.0233 after press headlines highlighted weak Australian growth forecasts from the IMF later recovering along with other Asian currencies and a higher Yuan fix. The CHF complex experienced an unexplained spike lower in the dollar falling from 0.8870 to 0.8800 around 5am time but quickly reversed settling around 0.8870.
2) Orderbook & Flow
EURUSD bids below collecting 1.3550-60
Orders collecting in USDJPY 75.80-76.00
EURGBP topside offers collecting around the 0.8850 handle
We were net buyers of USDAsia and bought a chunk of USDCNY. We sold NZD and AUD.
3) USD/Asia
USDKRW 1151.0 (Tuesday Opening level 1155.0)
USDINR 48.15 (48.42)
USDPHP 43.54 (43.92)
USDCNY1y 6.3325 (6.3495)
USDIDR 9090 (9220)
USDMYR 3.1210 (3.1475)
USDTWD 29.85 (29.95)
USDSGD 1.2625 (1.2685)
4) Opening Levels
EUR 1.3698
GBP 1.5725
JPY 76.35
CHF 0.8934
WTI 86.7
Brent 110.5
XAU 1808.6
Silver 40.04
X-Over 733
Greece 3536
Portugal 1124
Ireland 818
Spain 418
Italy 513
UK 10y 2.22
Ger 10y 1.76
US 10y 1.95
Bund 137.44
Spain over bunds 357
Italy over bunds 392
BeBanks Index 70.93
3m Eur Xccy -96.0
5) FOMC Preview
– We believe the FOMC is ready to act this week to boost investor confidence by adopting another unconventional policy move
– We expect the FOMC will announce a policy to extend the average maturity of its securities portfolio in an attempt to put downward pressure on longer-term interest rates
– Other moves are possible, though less likely, such as lowering the interest paid on excess bank reserves, or setting explicit economic targets that would motivate future policy action
HSBC Global Research