EUROPEAN FX UPDATE: Buck loses more swagger to the benefit of others

Analysis details (10:19)

DXY

The Greenback gravitated following its midweek ascent to new 2023 peak, but the index managed to retain 106.000+ status by a whisker and close above the psychological level before succumbing to more intense selling pressure and retreating to 105.660. Softer US Treasury yields and renewed risk appetite may well have undermined the Dollar, but in truth the same could be said for several of its rivals that grabbed the chance to claw back losses instead. Consequently, the deeper retreat was probably due to a combination of consolidation, corrective price action, profit taking or long liquidation into month and quarter end, on the assumption that only residual rebalancing requirements remained following spot September 29 on Wednesday. However, PCE data could easily prompt another change in direction, if not Chicago PMI, final UoM findings and Fed’s Williams.

NZD/AUD/CHF

Having struggled to get back above 0.5950 vs the Buck, the Kiwi made relatively light work of 0.6000 and may have derived some impetus from an upturn in NZ consumer confidence, while the Aussie extended its rebound towards 0.6500 from sub-0.6450 amidst the ongoing Yuan revival at the start of China’s mid-Autumn Festival and National Day break. Elsewhere, the Franc probed 0.9100 in wake of a much stronger than forecast Swiss KoF index, albeit down from the previous month after hefty upward revision.

EUR/GBP/CAD/JPY

The Euro bounced from around 1.0559 to 1.0616 irrespective of weaker than consensus German retail sales, French and pan Eurozone inflation metrics that exacerbated the revival in EGBs and overshadowed mostly firmer than anticipated Italian CPI, but Eur/Usd was hampered by the sheer size of option expiry interest at the 1.0600 strike given that 3.7 bn was due to roll off at the NY cut. Meanwhile, Sterling secured a firmer grip of the 1.2200 handle even before better than expected BoE consumer credit, mortgage approvals and lending, but stalled just ahead of the 10 DMA that came in at 1.2259. The Loonie decoupled from crude in the run up to monthly Canadian GDP and peered over 1.3450 from under 1.3500 and the Yen breached 149.00 within a 149.50-148.54 range post-mixed Japanese macro releases.

SCANDI/EM

More technical gains for the Sek regardless of conflicting Swedish consumption data or comments from Riksbank’s Floden (rather uncertain what will be done at the next meeting and the one at the start of 2024, Krona is undervalued and obviously problematic), but the Nok outperformed as Norway’s registered jobless rate dipped and outweighed an increase in Norges Bank daily foreign currency purchases for October. In China, no PBoC prop or company for the Cnh, but it carried momentum vs the flagging Usd to the brink of 7.2800 at one stage on the eve of China’s official PMIs with some encouragement via latest talks with the US, and in Mexico a hawkish hold from Banxico underpinned the Mxn.

29 Sep 2023 - 10:19- Fixed IncomeData- Source: Newsquawk