EUROPEAN FX UPDATE: Buck back in favour ahead of Powell part one

Analysis details (10:28)

DXY

The Dollar recouped all and a bit more of its w-t-d losses amidst another bout of risk aversion that is weighing on G10 counterparts, bar the Yen that is also benefiting from its safe haven allure to an extent. In index terms, a firm bounced off a higher 104.430 low lifted the DXY to the brink of 105.000, at 104.9500 awaiting arguably this week’s main events in the form of semi-annual congressional testimony by the Fed chair over the next two days and kicking off with Powell’s appearance before the Senate Banking Committee from 15.00BST today. However, supply may also factor as the Treasury curve tips flatter and softer in outright yield given Usd 14 bn 20 year notes on offer just after a speech from Fed’s Evans and before Harker and Barkin at the same time.

NZD/AUD

Risk-off sentiment took a big toll on the Kiwi and Aussie, irrespective of NZ trade data showing a narrower surplus or Westpac’s unchanged Australian leading index after revision from -0.2% to -0.1%. Nzd/Usd recoiled through 0.6300 to just shy of 0.6250 and away from decent option expiry interest at the round number (1 bn), while Aud/Usd lost 0.6900+ status alongside a sharp decline in the price of iron ore in the run up to preliminary PMIs.

CAD/NOK/MXN//GBP

All undermined by the collapse in WTI and Brent crude to varying degrees, with the Loonie striving to hold above 1.3000 vs its US rival in advance of Canadian CPI, the Norwegian Krona trying to stay afloat of 10.5000 against the Euro, Mexican Peso straddling 21.1800 vs the Greenback and Sterling struggling to contain losses sub-1.2200, regardless of mixed UK inflation data (headline CPI in line with consensus, core softer than forecast and other price metrics all stronger than expected).  

CHF/EUR/SEK

The Franc, Euro and Swedish Crown held up better than other major currencies, as hawkish SNB, ECB and Riksbank vibes continued to resonate, but Usd/Chf bounced from under 0.9650 again, Eur/Usd lost momentum to pivot 1.0500 and the 10 DMA in close proximity to, and Eur/Sek rebounded between 10.6400-10.6820 parameters, perhaps taking some note of pretty downbeat comments from Sweden’s Finance Minister hot on the heels of rises in sa and nsa unemployment rates (warned that job growth is to slow and unemployment will stabilise at a higher level than previously thought).

JPY

As noted from the outset, the Yen bucked the overall trend thanks to its safety credentials, but also in consolidative or corrective trade having slumped further overnight to circa 136.71 against the Buck and deeper lows vs other peers.

EM

No respite for the Try from cheaper oil as Turkish consumer confidence fell, while the Zar failed to derive impetus from stronger than forecast SA CPI as Gold retreated to test trendline support around Usd 1824/oz, and the Cny/Cnh were rattled by a weaker than anticipated PBoC onshore fix and the Usd recovery.

22 Jun 2022 - 10:28- Fixed IncomeData- Source: Newsquawk