EUROPEAN FX UPDATE: Aussie outperforms, Kiwi tags along and Pound in pursuit

Analysis details (10:11)

AUD/NZD/GBP/EUR

The Aussie regained momentum after Monday’s fade from 0.6700+ peaks vs its US peer in wake of hawkish RBA minutes revealing that the Board ‘actively’ considered a hike before deciding to hold fire, adding that it is important to be clear that policy may be tightened again to curb inflation in a timely manner as inflation is still too high. Aud/Usd rebounded firmly through 0.6700 towards 0.6750 where the 200 DMA lay, with added impetus from China where Q1 GDP beat consensus convincingly in y/y terms and retail sales even more so in March. However, the Aud/Nzd cross remained tethered around 1.0850, as the Kiwi reclaimed 0.6200+ status against its US counterpart ahead of NZ CPI data on Wednesday. Elsewhere, Sterling also staged a decent recovery vs the Greenback, with Cable back on the 1.2400 handle after the latest UK labour market report showing significantly hotter than forecast average earnings, but the Pound ran into resistance against the Euro circa 0.8818 and almost beside the 50 DMA. Moreover, Eur/Gbp was underpinned amidst relative stability in Eur/Usd that held ‘comfortably’ above 1.0900 before bouncing to 1.0982 alongside elevated EGB yields, though facing more decent option expiry interest at the 1.1000 strike (1.5 bn today) and not really reacting to a rather mixed German ZEW survey.

DXY/CHF/JPY/CAD

Having peaked near a key technical level yesterday, the Dollar and index waned even before the revival of major and EM rivals with the DXY losing grip of 102.000 and sight of the 21 DMA within a 102.140-101.640 range. Moreover, the Buck also pulled up just short of the next big upside target vs the Yen at 134.75 (Fib retracement) and this turned the overall tide somewhat after the rebound from last Friday’s minor new 2023 low. Hence, Usd/Chf retreated from 0.8988 to 0.8958, Usd/Jpy from 134.70 to 134.14 and Usd/Cad from 1.3398 to 1.3364 as the Loonie geared up for Canadian inflation metrics. Note, the Yen was largely unresponsive to comments from BoJ Governor Ueda who reiterated that there is no immediate need to review the 2013 joint statement with the Government - see 7.20BST post on the Headline Feed for more bullets.

EM

The Cnh and Cny were marginally impressed with the aforementioned Chinese macro releases as the Stats Bureau caveated that domestic demand is still too weak, while the Idr took widely anticipated unchanged BoI benchmark policy rates in stride, but the Huf resumed its bull run having breached chart resistance vs the Eur and the Zar latched on to Gold as the yellow metal probed Usd 2000/oz again.

18 Apr 2023 - 10:11- Fixed IncomeData- Source: Newsquawk