Dollar in demand

USD/JPY and the JPY crosses were better bid. USD/JPY was especially so, pushing through offers from @116.00 on pre-weekend and Saturday Gotobi Tokyo fix demand. Stops were tripped above 116.15, taking it to 116.20, a fresh trend and 7-year high. European names bought large in the push up. Offers were heavy at the high and trail up with Japanese exporters in the mix. Exporter offers trail up. Optionality is tipped at 116.50 and large stops are eyed above. Japanese importers and investors are amongst those on the bid on dips, buying large after the post-fix retracement down to 115.73. EUR/JPY rallied with USD/JPY from 144.39 to a fresh trend high of 144.84 before falling back to 114.31. It too has since steadied. 145.08 on January 2 is the high of the year, 145.67 the spike high on December 27 ’13. GBP/JPY and CAD/JPY see-sawed between 181.53-182.24 and 101.60-102.04, respectively. Soft commodity prices and the dovish BoE inflation report suggest more downside may be seen in both. There are some calls for crude oil to crash to as low as $30/brl. AUD/JPY traded 100.71-99 and NZD/JPY 90.90-91.29, the latter more soggy than the former. Next week will be chock-a-block with Japanese risk events including Q3 GDP Monday and announcements on any delay to Japan’s sales tax hike and snap elections.

EUR/USD and the EUR crosses parted company in Asia. EUR/USD fell back after its rebound to 1.2492 late in New York, continuing lower from 1.2478 to 1.2451 in Asia before steadying. Bids remain ahead of 1.2450 where large, E1.118 bln in option expiries will be seen at the New York cut. Massive expiries are at the 1.2400 and 1.2500 strikes below and above as well, effectively bracketing the pair perhaps into next week along with perceived risks into the weekend G20 Brisbane Summit. EUR/GBP topped out between 0.9635-52 with short-covering flows looking to have abated. EUR/CHF did little, treading water between 1.2019-23 and the market on the look-out for any SNB action to protect its 1.2000 floor.

GBP/USD pushed lower still in Asia, off from 1.5711 to 1.5666 and levels not seen since September of last year.

USD/CHF was bid alongside USD/JPY, up a leg from 0.9635 to 0.9661 but still well within its recent 0.9600-0.8700 range.

AUD/USD opened in Asia at 0.8723 and traded down a leg from 0.8724 to 0.8681. Under pressure from the get-go after failing at key resistance 0.8765 overnight, it fell through 0.8700 as USD/JPY spurted back above 116.00 to a fresh trend high. A bounce to 0.8711 was seen as USD/JPY retraced lower but offers returned and pushed AUD/USD back below the figure. AUD crosses were mixed with AUD/NZD up modestly from 1.1047 to 1.1081 with bids @1.1030 forcing a round of short-covering. Given the inverse tie to USD/JPY moves, AUD/USD could see moves towards 0.8600 if USD/JPY moves towards 117.

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