EUROPEAN FX UPDATE: Buck bides time before FOMC and busy pre-event agenda

Analysis details (09:28)

DXY

The Dollar and index retained a firm underlying bid following Tuesday’s rebound and strong end to October as the latter held tight within a 106.64-83 range. However, the Greenback turned somewhat mixed against major counterparts as the clock ticked down to the Fed and a packed docket in the interim comprising several market-moving macro releases, like ADP, the manufacturing ISM and JOLTS job openings all ahead of Friday’s NFP report, plus US construction spending. 

JPY

Far from all change for the Yen in the aftermath of a still uber-dovish BoJ, but the level of jawboning from Japanese officials cranked up to relieve some pressure and Usd/Jpy took heed alongside crosses. Indeed, the headline pair retreated from 151.70 to 151.15, albeit nowhere near hefty option expiry interest that could have exerted a gravitational pull, and namely 2.52 bn between 150.50-60 ahead of 1.25 bn at the 150.00 strike,

CHF/AUD/GBP/CAD/NZD/EUR

The Franc narrowly pivoted 0.9100 vs the Buck and was not overly concerned about a deeper contraction in the Swiss manufacturing PMI against expectations for a marginal improvement, while the Aussie gleaned some traction between 0.6345-19 parameters against its US peer from an upward revision to the final manufacturing PMI, a rebound in the price of iron ore and Aud/Nzd tailwinds to offset a surprise decline in building approvals and another disappointing Chinese manufacturing PMI. Elsewhere, the Pound straddled 1.2150, the Loonie hovered above 1.3900, the Kiwi drifted down from 0.5827 to probe 0.5800 after broadly weaker than forecast NZ HLFS and LCI metrics and the Euro remained below 1.0600 eyeing support at 1.0550 from a semi-psychological standpoint. Note also, Eur/Usd faced resistance in the form of 1.86 bn option expiries spanning 1.0590-1.0605.

SCANDI/EM    

Some solace for the Sek via a less contractionary Swedish manufacturing PMI, but more strain for the Nok as Norway’s manufacturing PMI lost 50.0+ status on the eve of the Norges Bank. Similar story for the Cny and Cnh, with the Caixin manufacturing PMI falling to 49.5 from 50.6 and confounding consensus for a slight pick-up, while the Zar was undermined by a dip in SA business sentiment and the Inr the tumbled to a new record low regardless of ongoing RBI intervention. Elsewhere, the Brl braced for the BCB and another anticipated 50 bp Selic rate cut.

01 Nov 2023 - 09:28- Research Sheet- Source: Newsquawk