EUROPEAN FX UPDATE: Aussie revival and Sterling survival in contrast to UK PM

Analysis details (10:39)

AUD/NZD

The Aussie and Kiwi led the chase to recoup lost ground against the Greenback amidst another upturn in risk appetite, while the former also gleaned traction from a record trade surplus built on a commodity-boosted rise in exports that outpaced a rebound in imports. Aud/Usd secured a firmer grip of the 0.6800 handle and Aud/Nzd held above 1.1000 as Nzd/Usd ran into resistance ahead of 0.6200.

GBP/DXY

Not the biggest G10 mover in outright terms, but the Pound was lively between 1.1994-09 parameters vs the Dollar and mostly firmer on the Eur//Gbp cross within a 0.8554-12 range, as the exodus of UK Ministers and Government personnel continued to the point that PM Johnson’s already tenuous position became impossible to cling on to. Indeed, after the number of resignations topped fifty and included the newly appointed Education Minister, the doomed leader of the Conservative Party will reportedly stand down and has informed the Queen as he intends to stay on until his successor is appointed. Meanwhile, the Buck consolidated off midweek peaks either side of 107.000, with little extra upside impetus from FOMC minutes even though the release revealed a potentially hardened resolve to fight inflation via ‘even more restrictive’ policy, if price pressures remain persistently elevated.

CAD/EUR/JPY/CHF

All mixed vs their US counterpart and relatively out of the limelight, but the Loonie has Canadian trade and Ivey PMIs to look forward to, the Euro ECB minutes and the Yen saw sourced BoJ reports suggesting that the Bank will likely increase its fy 2022 inflation forecast marginally to slightly above 2% from 1.9% in its quarterly outlook due on July 21, while lowering its economic growth forecast (currently 2.9%), maintain ultra-low interest rates and the dovish policy bias. Usd/Cad derived some encouragement from comparatively less volatility in oil prices to pare losses from 1.3056 to 1.2992 at best, Eur/Usd pivoted 1.0200 with support from a sharp rebound in EGB yield vs resistance in the form of decent option expiry interest from 1.2015-25 in 1.46 bn, Usd/Jpy rebounded from circa 135.55 to 136.22 and Usd/Chf straddled 0.9700 and 0.9900 against the Euro as SNB reserves showed a significant decline in June from the previous month.

SCANDI/EM

The Nok also benefited from a degree of stability in Brent crude and its bounce from sub-Usd 100/brl to the extent that it shrugged off weaker than expected monthly Norwegian mainland GDP and a drop in manufacturing output, while the Cnh and Cny were bolstered by news that China is mulling Usd 220 bn stimulus measures to be funded by the unprecedented issue of bonds, but the Huf only got a short-lived reprieve when the NBH jacked up its 1 week depo rate by 200 bp to 9.75% and the Try came under renewed pressure. Elsewhere, the Pln awaits another hike from the NBP with the consensus anticipating 75 bp.

07 Jul 2022 - 10:38- Fixed IncomeData- Source: Newsquawk