EUROPEAN FX UPDATE: Aussie racked by risk aversion and Euro riddled with PMI pain

Analysis details (10:33)

DXY/EUR

Having failed to breach 1.1000 convincingly when the Dollar and index were at low ebbs on Thursday, the Euro struggled to contain losses and ended the session bearishly from a technical perspective just above 1.0950. Eur/Usd subsequently fell further from the psychological level and a Fib not far below when French flash PMIs came in anything but their name implies. Specifically, services slumped beneath the key 50.0 level and dragged the composite down with it to set off recessionary sirens as the manufacturing sector remained in contractionary territory, albeit eclipsing expectations fractionally. The headline pair lost 1.0900+ status and was hardly helped by weaker than forecast German or pan Eurozone preliminary PMIs even though the writing was probably on the wall. However, Eur/Usd found some underlying support near 1.0850 as the DXY waned within a 103.170-102.370 range after scaling the 100 DMA (at 103.056 today) awaiting the US surveys, plus yet more Fed and ECB speakers.

AUD/NZD

The Aussie extended its losing streak as risk sentiment remained sour to the detriment of base metals, the Yuan lost its 7.2000 prop vs the Usd in Chinese holiday-thinned trade and PMIs weakened across the board. Aud/Usd slumped from around 0.6767 through a few chart props on the way to a sub-0.6700 trough and the Aud/Nzd cross probed 1.0900 from circa 1.0938 even though the Kiwi lost momentum against the Buck between 0.6190-36 parameters.

GBP/CAD/CHF

All softer vs the Greenback, and the Pound unable to glean any real traction via better than expected UK retail sales data or consumer confidence as flash PMIs missed consensus to compound economic concerns hot on the heels of the BoE’s 50 bp hike. Meanwhile, another downturn in WTI undermined the Loonie and the Franc continued to rue the SNB only tightening by 25 bp when the market wanted more. Cable faded from 1.2754 to 1.2688, Usd/Cad rebounded from 1.3144 towards 1.3210 and Usd/Chf from 0.8947 to 0.9013.

JPY

The Yen regained some poise and perhaps donned a degree of semi-round number resilience as Usd/Jpy stalled at 143.45 following Thursday’s bullish upside break beyond a Fib at 142.50. Softer US Treasury yields and risk aversion may have underpinned the Yen in wake of mixed Japanese national inflation metrics and PMIs overnight more so than familiar verbal intervention from Finance Minister Suzuki repeating that sharp currency moves are undesirable.

SCANDI/EM

Brent’s deeper retracement and the aforementioned risk-off mood sapped more post-Norges Bank strength from the Nok, while the Mxn also fell in tandem with crude irrespective of Banxico stating it considers it will be necessary to maintain the reference rate at its current level for an extended period to achieve an orderly and sustained convergence of headline inflation to the 3% target, and the Try plunged to deeper all time lows in follow-on disappointment from the CBRT’s ‘smaller’ than anticipated rate hike on Thursday.

23 Jun 2023 - 10:33- Research Sheet- Source: Newsquawk