EUROPEAN FX UPDATE: BoJ stands pat and Yen falls flat, while Euro relies on huge expiry

Analysis details (10:26)

DXY/JPY/EUR

The stakes were high going into the BoJ policy meeting even though new Governor Ueda provided plenty of assurance that he did not intend to rock the ultra-easy boat. However, guidance via the accompanying statement and his first press conference was arguably more dovish than anticipated, not to mention the fact that a thorough monetary policy review was announced and is estimated to take 1 to 1 1/2 years to complete. Usd/Jpy jumped in response along with Yen crosses, and the headline pair only pulled up around 135.85 from a 133.38 low, ahead of a Fib retracement level just 5 pips shy of the next round number. Meanwhile, Eur/Jpy flew from circa 147.23 to bang on 149.50 and offered the Euro a prop against the Dollar for a while, but Eur/Usd was left hanging between 1.1039-1.0982 parameters after a raft of mostly weaker than expected Eurozone data, bar hot preliminary French inflation metrics that proved to be a flash in the pan. In contrast, or accordingly, this gave Greenback a boost and the index more recovery momentum to reclaim 101.500 status on the way to topping 102.000 for a fresh w-t-d peak, at 102.050, thus far. Still to come on a packed month end schedule, Germany’s national CPI readings, US PCE, ECI and the Chicago PMI, all ahead of 3.1 bn option expiry interest at 1.1000 in Eur/Usd for Friday’s NY cut.

AUD/CAD/CHF/GBP/NZD

All down against their US rival, and the Aussie unable to repel the latest attempt to breach 0.6600 convincingly, irrespective of 1.25 bn option expiries bang on the strike, while the Loonie retreated through 1.3650 amidst another bout of weakness in crude benchmarks awaiting Canadian monthly GDP and budget balances for some independent direction. Elsewhere, the Franc straddled 0.8950 with some traction from SNB President Jordan repeating a standard line that domestic inflation is higher than desired, leaving the door open for more rate hikes, to counter feeble Swiss retail sales and a bigger than forecast fall in the KoF. Sterling probed 1.2450 from just over 1.2500 in the absence of anything UK specific and tested resistance into 0.8800 vs the Euro at the 100 DMA, but the Kiwi continued to hold comfortably or even solidly above 0.6100 with tailwinds from Aud/Nzd under 1.0800.

SCANDI/EM

The Sek coped relatively well with weak Swedish consumption data and a slowdown in household lending, but the Nok lost a Fib prop following the Norges Bank bigger than anticipated daily foreign currency purchase remit for May and EM currencies were broadly lower vs the Usd, including the Zar in wake of below consensus SA M3 money supply and private sector credit, plus the Cnh irrespective of another injection of PBoC liquidity in advance of China’s Golden Week holidays as the Politburo said the economic expansion is under recovery, but internal momentum is weak and transformation faces new constraints.

28 Apr 2023 - 10:26- Fixed IncomeData- Source: Newsquawk