EUROPEAN FX UPDATE: Buck continues to back off, but not all able to fully benefit

Analysis details (10:18)

DXY/GBP

A retreat in US Treasury yields and very little sign of hope heading into the latest meeting aimed at striking a debt ceiling deal saw the Greenback gravitate lower from a 102.570 peak in index terms, through the 50 DMA at 102.390 and Monday’s 102.350 session low, to 102.190. However, the Dollar’s major rivals faced psychological hurdles, technical resistance and chunky option expiry interest ahead of some top tier data, including retail sales and ip plus another barrage of Fed speakers with potential to push back against dovish market pricing. Moreover, Sterling laboured after the latest UK jobs report showed a spike in the claimant count, a slide in HMRC payrolls, an uptick in the unemployment rate and ex-bonus average earnings inching up a tad less than expected. Cable rebounded firmly from 1.2466 to 1.2546, but the Eur/Gbp cross remained underpinned either side of 0.8700.

AUD

The Aussie failed to sustain recovery momentum via hawkish RBA minutes as it retreated in sympathy with the Yuan on the back of weaker than forecast Chinese ip, retail sales and urban investment, while also taking heed of a deterioration in Westpac consumer sentiment. Aud/Usd lost 0.6700+ status as a result and perhaps capped by 1.5 bn expiries between the round number and 0.6710, while Aud/Nzd waned from just under 1.0750 to probe 1.0700.

CHF/JPY/EUR/NZD/CAD

All taking advantage of the Buck’s relapse, with the Franc back above 0.8950, the Yen bouncing from sub-136.00, the Euro probing 1.0900, the Kiwi firmer on the 0.6200 handle and the Loonie closer to 1.3450 than 1.3500 in advance of Canadian CPI. Note, Eur/Usd hardly wavered in wake of in line Eurozone GDP metrics, above forecast employment and a somewhat mixed ZEW survey.

SCANDI/EM  

The Sek held off its post-Swedish CPI lows even though money market inflation expectations dipped, but the Cny and Cnh both reversed through their 200 DMAs following the aforementioned below consensus Chinese data. Conversely, the Pln was boosted by Polish GDP coming in significantly stronger than anticipated on a q/q basis and containing the y/y contraction to just 0.2% vs -0.6% expected, albeit with the prior quarter’s 2% growth revised down to 0.6%.

16 May 2023 - 10:18- Fixed IncomeData- Source: Newsquawk