EUROPEAN FX UPDATE: Aussie toppled by ‘finely balanced’ RBA minutes

Analysis details (09:57)

AUD/NZD  

Hawkish-leaning comments from RBA Governor Bullock may well be more pertinent than the minutes from this month’s policy meeting given the recent hot labour market report, but the Aussie remained weak as the accounts revealed that the decision to hike rates by 25 bp was a close call and lags in the transmission of monetary policy meant there is a risk that past tightening could lead to a sharper economic slowdown. Moreover, Aud/Usd continued to track moves in Usd/Cny and Usd/Cnh inversely, and the Yuan was undermined by more PBoC easing, albeit with the 5 year MLF ‘only’ trimmed by 10 bp compared to the 15 bp reduction some were expecting. Aud/Usd retreated through 0.6800 from 0.6855 before gleaning some traction from a generally soft Greenback, but the Aud/Nzd cross stayed sub-1.1000 as Nzd/Usd probed 0.6200 in wake of an encouraging improvement in Westpac’s gauge of NZ consumer sentiment.

DXY/EUR/JPY      

The Buck bounced a bit further and finally made a clean break of 142.00 against the Yen, but unsustainably even though US Treasury yields played catch-up with gains in Europe as cash markets re-opened from the long Juneteenth holiday weekend. Usd/Jpy spiked to 142.25 overnight amidst Japanese demand for the headline pair before reversing relatively sharply when demand dried up and only stalled ahead of 141.50, while the Euro managed to stay afloat of 1.0900 and probe a Fib retracement level at 1.0920 to the detriment of the Dollar and index. Indeed, the latter faded at 102.620 and slipped back to 102.320 in advance of housing starts, building permits and a trio of Fed speakers.

GBP/CAD/CHF  

All narrowly mixed vs their US counterpart and seemingly waiting for some independent impetus or direction, as the Pound waned within a 1.2806-1.2763 range on the eve of UK inflation data, the Loonie meandered from 1.3239 to 1.3206 in the run up to Canadian retail sales and BoC minutes and the Franc hovered between 0.8986-51 parameters before the SNB on Thursday and following a considerably wider Swiss trade surplus boosted by much stronger than prior watch exports.

SCANDI/EM

The Sek depreciated further against the Eur to circa 11.7650 at one stage, but the Nok recouped some losses from around 11.7125 as Brent consolidated and the Try pivoted 23.6000 vs the Usd as Turkey raised its minimum wage by 34% to up the ante for the CBRT in terms of a rate response. Elsewhere, the Cny and Cnh were hampered by the aforementioned PBoC MLF easing and another marked downward revision to China’s 2023 GDP outlook, this time by HSBC, while the Huf traded cautiously pre-NBH in anticipation of another cut in one day loan rate.

20 Jun 2023 - 09:57- Fixed IncomeData- Source: Newsquawk