EUROPEAN FX UPDATE: Aussie and Kiwi extend gains, while Euro suffers more pain

Analysis details (10:31)

DXY/EUR/JPY

Having fallen only a fraction shy of reaching 98.000 when risk sentiment was deteriorating again yesterday, the index subsequently crossed the psychological mark on the back of further aversion prompted by Russia’s attack on a Ukrainian nuclear plant and seizure of the facility. The DXY reached 98.158 in follow-through price action and could easily have seen more upside towards another peak from mid-2020 (June 1’s 98.322 apex for example) if barrier defences in Eur/Usd at 1.1000 were breached and Usd/Jpy broke back above 115.50 convincingly. However, the Euro just held in and the Yen regained some safe-haven premium as US Treasury yields retreated amidst more pronounced flattening ahead of NFP that could provide markets with a distraction from geopolitics, and Russia-Ukraine in the main.

AUD/NZD

The Antipodean Dollars continue to outperform and avoid the antipathy stemming from the aforementioned conflict situation and the ongoing rally in commodity prices is giving the Aussie more momentum to breach technical resistance levels, while the Kiwi is tagging along with bullish impulses from the RBNZ’s hawkish policy guidance plus corrective trade/positioning in Aud/Nzd that remains capped below 1.0800. Aud/Usd scaled 0.7350 following a close above the 200 DMA on Thursday and probed a Fib at 0.7365 on the way to 0.7375, while Nzd/Usd secured a firmer grasp of the 0.6800 handle.

CHF/GBP/CAD    

All softer vs their US counterpart as risk-off flows intensify, but the Franc retained an element of safety allure to keep it afloat over 0.9200, Sterling strived to stay within sight of 1.3300 that coincided with a Fib and the Loonie straddled 1.2700 where hefty option expiry interest sits (2 bn at the strike), with some traction from crude oil in advance of Canadian building permits, labour productivity and Ivey PMIs.

SCANDI/EM

As the tone turns increasingly negative, the Nok is more reliant on Brent for a crutch and the Zar will be hoping that Gold makes a clean break of Usd 1950/oz, but the Cnh and Cny should benefit at the expense of others pending any effort to curb its appreciation like state bank intervention to defend 6.3100 or an official move from China’s NPC over the weekend. Elsewhere, the NBP and CNB have resorted to concerted action to try and shore up the Pln and Czk, while the NBH has made no comment so is presumably hoping that rate hikes will do the trick. For the Rub, 110.00 looks pivotal from a pure price point, but it’s all about what happens in Ukraine.

04 Mar 2022 - 10:29- ForexData- Source: newsquawk