EUROPEAN FX UPDATE: big figure levels and option expiries still salient

Analysis details (09:53)

DXY/JPY/EUR

The Dollar index remained tightly bound around 104.000 awaiting the first real US data point of a largely barren week that was also bereft of Fed speakers due to the customary silence observed ahead of FOMC policy meetings, and this rangy, restrained state of affairs kept many major pairings within the basket relatively contained by default. Indeed, Usd/Jpy and Eur/Usd were also tethered to round numbers, at 140.00 and 1.0700 respectively, eyeing yields and hefty option expiry interest that continued to exert influence on direction within familiar confines. On that note, expiries in both pairs were particularly large on Thursday as 3 bn sat bang on the 140.00 strike and between 1.0700-1.0690 ahead of the NY cut and US jobless claims in the interim.

NZD/AUD       

Corrective price action and consolidation down under saw the Kiwi claw back some lost ground vs the Aussie, although Aud/Nzd and Aud/Usd may also have been hampered by a smaller than forecast Australian trade surplus as exports fell 5%. Meanwhile, Nzd/Usd could have drawn encouragement from NZ manufacturing sales declining at a slower pace in Q1 compared to the prior quarter. Aud/Usd was capped below 0.6700, albeit holding above 0.6650, while the cross eased back towards 1.1000 and Nzd/Usd pivoted 0.6050.

CAD/GBP/CHF

All firmer against the Greenback, but still inside bounds set out recently as alluded to above. The Loonie maintained BoC hike momentum either side of 1.3350 in the run up to comments from Beaudry and Canada’s May LFS on Friday, Sterling straddled 1.2450 in the absence of anything UK-specific aside from a less weak than feared RICS house price balance countered by slowdowns in recruitment and pay per KPMG, and the Franc spanned 0.9100 ahead of a speech by SNB’s Jordan.

SCANDI/EM

The Nok recouped more declines irrespective of a narrower Norwegian current account surplus and the FSA warning that high levels of household debt, elevated residential and commercial property prices represent key vulnerabilities to the domestic financial system, while the Cny and Cnh bounced off fresh lows in advance of Chinese CPI and PPI metrics tomorrow, but the Try collapsed again for all the well documented Turkish reasons. Elsewhere, the Huf was slightly deflated following softer than consensus Hungarian headline and core inflation readings in contrast to the resurgent Zar pre-SA current account and manufacturing production releases.

08 Jun 2023 - 09:53- Fixed IncomeData- Source: Newsquawk