EUROPEAN FX UPDATE: Buck fades across the board before the major events

Analysis details (10:18)

DXY/EUR/GBP

There may well be bigger deviations and some range breaks before Monday’s session draws to a close, but in the interim most G10 currencies and pairings appeared content to bide time and hold fire for this week’s potential market-movers including data and Central Bank policy meetings. Indeed, the Greenback largely gyrated and the index sat tight within 103.290-700 confines, albeit a bit more prone to downside pressure from a positional perspective given another round of IMM spec short covering, according to latest CFTC data, while yield premiums and differentials shifted in favour of Sterling and the Euro - former after hawkish-leaning comments from BoE’s Haskel. Consequently, Cable inched a tad closer to 1.2600 and Eur/Usd regained momentum around 1.0750 with eyes on a virtual double top between 1.0785-87 and decent option expiry interest just above (1 bn from 1.0790-1.0800 to be precise). 

AUD/NZD

The Aussie was hardly hampered by thinner trading conditions due to the King’s Birthday Holiday as broad risk appetite picked up and the softer Buck provided Aud/Usd with incentive to rebound firmly from sub-0.6750 lows irrespective of ongoing weakness in the Yuan, and the Kiwi tagged along with a lag as the Aud/Nzd crossed hovered above 1.1000 and Nzd/Usd was capped ahead of 0.6150. Note also, the Aussie may well have been underpinned by Government plans to increase the wage for the temporary skilled migration threshold (TSMIT) and simplify the visa process to encourage immigration on the basis that this could have a bearing on RBA rates in similar vein to the rise in minimum wage that was a decisive factor cited behind last Tuesday’s 25 bp hike.

CHF/CAD/JPY

All mildly firmer against their US as the Franc pared declines from 0.9045 and the Loonie regrouped from beneath 1.3350 even though oil came off the boil again, while the Yen took softer than prior Japanese corporate goods prices largely in stride between 139.64-24 parameters regardless of the fact that this will likely keep the BoJ in ultra-easy mode come Friday.

SCANDI/EM   

The tables turned somewhat for the Sek and Nok as the latter was undermined by a downturn in Brent and the former braced for Swedish inflation data, but the Cny and Cnh remained on the backfoot in wake of more Chinese banks lowering deposit rates and the Try was not able to derive any support from latest aggressive CBRT rate calls as Turkey’s current account deficit widened. Conversely, yet more technical advances for the Zar and some traction for the Czk via firmer than expected Czech CPI metrics.

12 Jun 2023 - 10:18- Fixed IncomeData- Source: Newsquawk