EUROPEAN FX UPDATE: Aussie leads broad revival against Greenback

Analysis details (10:14)

AUD/CNY-CNH/NZD

The Aussie may have perked up in time for June and Q2 CPI metrics, but it also piggy-backed the Yuan in wake of yet another much stronger than expected PBoC reference rate for the onshore unit, more reports of intervention in both the Cny and Cnh by major Chinese state-owned banks and the Politburo promising to pull out multiple economic support stops on Monday. Moreover, the prospect of further stimulus in China lifted commodities such as iron ore and helped Aud/Usd extend its rebound beyond 0.6750 to probe decent option expiry interest at 0.6770 (1.1 bn) before pulling up ahead of 0.6800 and the 10 DMA just under the psychological level. This also gave the Aussie enough impetus to turn the tide vs the Kiwi as Aud/Nzd bounced from 1.0856 to peer over 1.0900 and Nzd/Usd faded from 0.6222 to 0.6191 before regrouping.

DXY/GBP/JPY/CHF/CAD

Having formed a virtual double top around 101.430, the Dollar index faded amidst demand for the Yen overnight at the Tokyo fix and a recovery in Sterling, aided by a pullback in the Eur/Gbp cross rather than anything really Pound positive or UK specific. Meanwhile, the Franc managed to contain declines to a minimum in the face of firmer US Treasury yields and the Loonie maintained momentum with the assistance of ongoing strength in oil. The DXY eased back to 101.180 at one stage, Cable topped 1.2860 from circa 1.2810, Usd/Jpy retreated from 141.62 to 141.21 with little reaction to Japan’s updated Government forecasts (see 8.48GMT post on the Headline Feed for details), Usd/Chf reversed from 0.8702 to 0.8677 and Usd/Cad from 1.3177 to just shy of 1.3150.

EUR

Almost deja vu for the Euro, but from lower planes to start with, as Germany’s Ifo survey chimed with the downbeat preliminary PMIs for the most part, aside from expectations holding up better than anticipated and came with pretty bleak accompanying statements. In short, GDP is likely to contract in Q3, as the weak phase extends and no improvement in exports is seen, though on that note the Economy Ministry said it intends to ease export controls which are affecting EU, NATO and other partner nations. Eur/Usd slipped from 1.1085 to test a Fib retracement at 1.1055 and Eur/Gbp from 0.8637 to the brink of 0.8600.

SCANDI/EM

The Sek coped better with mixed Swedish PPI data than the Nok with a deterioration in Norwegian industrial confidence or the Try with a dip in Turkish manufacturing sentiment, but the Inr would have continued to rally without the RBI stepping into cap its rise via spot and forwards along with import hedges, according to market participants.  

25 Jul 2023 - 10:14- Fixed IncomeData- Source: Newsquawk