EUROPEAN FX UPDATE: Buck continues to buckle as rivals broach big figure levels

Analysis details (09:48)

DXY/EUR

The Dollar and index remained weak in wake of Wednesday’s softer than expected headline US inflation data and the latest FOMC minutes highlighting that some officials contemplated maintaining rates earlier this month given the banking sector stress. The DXY dipped below another recent low as the Euro cleared the psychological 1.1000 level more convincingly at the second time of asking, irrespective of very big option expiry interest at the strike (3.4 bn) and a dovish-leaning ECB sources piece suggesting that the GC seems more inclined to hike by 25 bp in May rather than another half point favoured by Holzmann among other hawks. Eur/Usd extended to 1.1025 and set sights on the current 2023 peak from February 2, at 1.1033, while the index declined to 101.250 from a 101.600 peak ahead of US producer prices and jobless claims.

AUD/NZD

Backed by an upbeat labour market report and particularly pleasing internals (employment exceeded consensus more than two-fold, full time jobs surpassed the total payroll number and the participation rate ticked up), the Aussie rebounded firmly through 0.6700 and beyond the overnight high to 0.6736, while the Aud/Nzd cross probed 1.0800 as some pundits weighed up the prospect of the RBA resuming tightening in May. However, the Kiwi also gathered momentum against the Greenback as Nzd/Usd topped 0.6240 in advance of the NZ manufacturing PMI.

CHF/CAD/GBP/JPY

All taking advantage of their US peer’s ongoing demise, with the Franc edging closer towards 0.8900, the Loonie eyeing/testing 1.3400, Sterling reclaiming 1.2500+ status regardless of somewhat conflicting UK data (GDP, IP/Output and Trade) and the Yen having another look above 133.00. Next up for Usd/Cad and Cable, comments from BoC and BoE Governors Macklem and Bailey at the IMF.

SCANDI/EM    

No clear direction for the Sek via marginally mixed Swedish money market inflation expectations, but the Cnh and Cny were underpinned by surprisingly strong Chinese exports that swelled the trade surplus, the Krw got a lift from the BoK’s big FX swap with the SK pension fund (up to Usd 35 bn), the Hkd was propped up by more concerted HKMA intervention and the Zar shone with Gold as bullion got to within a whisker of Usd 2030/oz.

13 Apr 2023 - 09:48- Fixed IncomeData- Source: Newsquawk