EUROPEAN FX UPDATE: Buck bolstered pre-CPI, but Yen weak ahead of GDP

Analysis details (10:30)

DXY/JPY

Notwithstanding hefty gains against the Yen, the Dollar retained a decent underlying bid following Friday's rebound and relatively firm close. Broadly stronger than forecast prelim UoM survey findings and a rise in 1 year inflation expectations gave the Greenback fundamental impetus, while benchmark revisions to December CPI saw the headline and core measures upgraded to 0.1% from -0.1% and 0.4% from 0.3% respectively due to seasonal factors. The index extended further to 103.840 from a 103.560 low before waning on the eve of January inflation data and a speech from Fed’s Bowman that may provide independent direction. Conversely, the Yen reversed sharply awaiting confirmation that Ueda will be nominated as next BoJ Governor on Tuesday, and with his ex-staff secretary during his time at the Bank indicating that the candidate will likely take cues from data when deciding on the appropriate time to end ultra-accommodation. Usd/Jpy rebounded from around 131.32 through the 55 DMA (132.59) before tripping some stops on a breach of 132.76 to circa 132.69 in advance of Q4 Japanese GDP.

NZD/AUD

The Kiwi maintained hold of the 0.6300 handle vs its US peer and clawed back more losses against the Aussie before the latest NZ Food Price Index and Australian Consumer Sentiment reading, but more importantly perhaps Monetary and Inflation outlooks for Q1 and NAB Business Conditions and Confidence for January respectively overnight. Aud/Nzd retreated from circa 1.0971 towards 1.0930 as Aud/Usd hovered above 0.6900 amidst reported anger and scrutiny of RBA Governor Lowe over rate hikes and a supposed closed door meeting he had with banks after last Tuesday’s policy meeting.

CHF/EUR/GBP/CAD        

All narrowly mixed vs the Buck, with the Franc underpinned between 0.9221-60 parameters in wake of above consensus Swiss CPI readings and hardly reacting to a rise in weekly sight deposits at domestic banks. Indeed, the Eur/Chf cross remained capped even though Eur/Usd found underlying bids into 1.0650 and EGBs bounced firmly after less hawkish-sounding commentary from ECB’s Centeno and de Guindos plus downward revisions to EC estimates for inflation in 2023 and 2024. Elsewhere, Sterling straddled 1.2050 ahead of UK labour data on Tuesday and CPI on Wednesday and the Loonie consolidated post-Canadian jobs strength within a 1.3345-79 range.

SCANDI/EM

The Sek held up better than the Nok as the latter was undermined by a downturn in Brent, while the Zar underperformed beneath 18.0000 ve the Usd briefly following a warning from Moody’s over the outlook for SA growth this year, the Cny and Cnh both weakened further, through 6.8000 as the PBoC set a sub-6.8100 midpoint fix for the onshore unit and the Chinese spy balloon spat spiralled, and the Try was hardly helped by a wider than anticipated Turkish current account deficit.

13 Feb 2023 - 10:30- Fixed IncomeData- Source: Newsquawk