EUROPEAN FX UPDATE: Buck broadly softer, and even Aussie benefits for a while

Analysis details (10:15)

DXY

The Dollar extended its decline in wake of Monday’s considerably weaker than forecast US manufacturing ISM with sub-50 new orders and employment components that came alongside worse than anticipated construction spending compounded by a downgrade to an already negative back month reading. The index lost more momentum below 112.000 from 111.890 at best to probe support around 111.000 and briefly dipped to 110.970 ahead of several Fed speakers and data in the form of factory orders amidst another and more pronounced retreat in bond yields that boosted overall risk sentiment.

GBP/EUR/CHF    

In stark contrast to the Greenback’s fall from grace, Stealing continued its relatively swift and increasingly strong renaissance, with Cable probing 1.1400 and a cluster of former supports that turned into resistance, including 1.1405 (Fib retracement), 1.1406 and 1.1412 (both breakout lows) on the way to circa 1.1429 before topping out, and Eur/Gbp down to around 0.8649 compared to a 0.9900+ spike at the start of the previous week. However, the Euro also extracted impetus from its US peer’s demise, as Eur/Usd got to within a handful of pips from 0.9900 and breached a Fib at 0.9851, while the Franc reclaimed 0.9900+ status against the Buck and dipped under 0.9750 vs the Euro on further recognition of SNB Chair Jordan underscoring that the Chf is no longer highly valued.

NZD/CAD/JPY/AUD

The Kiwi derived some traction ahead of the RBNZ via an improvement in NZIER Q3 confidence (or less pessimism to be precise), but was banking on a 50 bp hike and no disappointment given that its Antipodean neighbour was undermined by the RBA failing to deliver and opting to slow the pace of hiking to 25 bp. Nzd/Usd rebounded over 0.5700 to peer above 0.5750, with Aud/Nzd cross tailwinds between 1.1418-1.1327 parameters, while Aud/Usd ran into resistance just under 0.6550 and drifted back down beneath 0.6500 irrespective of significantly stronger than expected Aussie building approvals. Elsewhere, the Loonie straddled 1.3600 within a wide 1.3653-1.3568 range and the Yen was more contained from 144.41 to 144.92 following largely in line with consensus Tokyo CPI metrics.

SCANDI/EM

Further respite for the Sek and Nok due to a pickup in general risk appetite, while the Cnh maintained its recovery momentum before stalling above 7.0500 and the 21 DMA, and the Zar was encouraged by Gold topping Usd 1700/oz.

04 Oct 2022 - 10:15- Fixed IncomeData- Source: Newsquawk