Eur and Aud hold on to overnight gains, supported by firm Asian equities. Eur$ well supported ahead of today’s ECB 3y LTRO allotment, running topside stops above 1.3100 to 1.3127 high with light leveraged demand seen in the move. Further stops up to 1.3150 are at risk of being triggered into early London trading.
In EM space, $KRW remains under pressure with continued corporate Usd supply related to a one-off hedging flow cited is close of coming to an end. $Cny fix came in 103pips lower at 6.3248, dragging the CNY curve ~100pips lower from the open. On the dip, macro names were again better UsdCny buyers on profit-taking. Net, net however, flows across other pairs are skewed towards better Usd supply, notably against SGD.
All eyes on ECB’s first 3Y LTRO allotment later today. EUR107bn is expected to come from the maturing 3m LTRO (EUR138bn) and around EUR50bn to be shifted from the 12m LTRO (held in October where EUR57bn was borrowed by 181 banks), with some limited additional new demand. For UK MPC minutes today, consensus is expecting the MPC to have voted unanimously (9-0) to keep monetary policy unchanged with Bank rate and asset purchase unchanged. Focus will continue to be on the rhetoric of the minutes for signs of additional QE.
On the data front, NZ Q3 CA deficit widened from 3.7% of GDP to 4.3% of GDP, largely driven by a sharper decline in trade balance and an increase in investment income deficit.
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