EUROPEAN FX UPDATE: Buck bouncy and Pound perky, but Yen waning

Analysis details (10:07)

DXY/GBP/JPY

The Dollar stabilised somewhat after Friday’s abrupt fall from grace when the index reversed to a fresh low for the week (111.680) having registered a new high (113.950) earlier in the session, and its recovery came alongside a marked retreat in the Yen following more suspected intervention overnight to compound the touted Usd 30 bn+ that is said to have been executed on October 21 by the MoF and BoJ. No confirmation was forthcoming from Japan’s Finance Minister Suzuki, but the manner of the move in Usd/Jpy from almost 152.00 to around 145.50 speaks volumes, irrespective of a more general Greenback fade due to a less hawkish Fed story in the WSJ and remarks from Daly. The headline pair rebounded to circa 149.70 at one stage, while the DXY regained poise within a 112.440-111.760 range and could arguably have reclaimed more losses if Sterling was not quite so resurgent on the prospect of Rishi Sunak becoming UK PM at the second attempt. However, Cable failed to retain 1.1400+ status and retested bid/support into the round number below awaiting confirmation of his victory, testimony from BoE’s Ramsden to a parliamentary committee, and with little reaction to flash UK PMIs that were anything but.

AUD/NZD

Several negatives for the Aussie to contend with, including jitters ahead of Tuesday’s budget that is expected to see a substantial reduction to the outlook for GDP, while heavy losses the Hang Seng tech index also weighed along with MS reaffirming its short Aud/Nzd cross call. Aud/Usd fell from just over 0.6400 to probe 0.6300, Aud/Nzd pulled back through 1.1050 and Nzd/Usd was capped into 0.5800, but held just above 0.5700 in holiday-thinned trade due to NZ Labour Day.

CAD/EUR/CHF

The Loonie lost ground vs its US counterpart in tandem with WTI, the Euro in wake of mostly weaker than forecast preliminary Eurozone manufacturing and composite PMIs and the Franc following another hefty fall in weekly Swiss sight deposits at domestic banks. Usd/Cad spiked from the low 1.3600 area towards 1.3750, Eur/Usd stalled only 1 pip shy of 0.9900 before pulling back to 0.9817 or so and closer to big option expiries at the base of a range starting at 0.9740-50 and extending to 0.9875 (see 7.25BST post on the Headline Feed for details), and Usd/Chf popped beyond parity from sub-0.9950 at one stage.

SCANDI/EM

Brent’s demise took a toll on the Nok, while the Cny and Cnh could not derive traction from the upbeat elements of a mixed bag of delayed Chinese data, continuity at the help of the CCP as Xi secured a 3rd term as President given the weakest PBoC fix for the onshore Yuan since mid-2020 and Covid restrictions were tightened in China’s southern manufacturing hub, Guangzhou. Indeed, Usd/Cnh almost hit 7.3000 when posting another new record peak and elsewhere the Huf handed back recovery gains from its all time low as Hungary’s Finance Minister said the economy will slow in the first half of 2023.

24 Oct 2022 - 10:07- Fixed IncomeData- Source: Newsquawk