EUROPEAN FX UPDATE: Buck maintains bullish momentum, while Euro whipsaws

Analysis details (10:09)

DXY/EUR

It goes without saying that the Dollar index and Euro are inextricably linked by their composition, so volatility in Eur/Usd around the 1.0500 level translated into choppy trade for the DXY within a 104.700-350 range. However, aside from general risk sentiment that turned bearish again on heightened global growth/inflation/recession concerns, choppy price action in the single currency came on the back of conflicting Eurozone data, as CPI from German state NRW slipped on a m/m basis and slowed y/y (latter subsequently echoed by other regions) in stark contrast to Spanish HICP that sharply exceeded expectations. Nevertheless, the Greenback retained an underlying bid on month end rebalancing grounds amidst a packed Wednesday agenda including more from the ECB’s Sintra Forum where President Lagarde, Fed Chair Powell and BoE Governor Bailey appear together from 13.30BST.

AUD/NZD

The Aussie may have felt a tad unlucky given much better than expected retail sales, but it fell prey to the aforementioned loss of risk appetite plus the failure of Volt Bank and gave up 0.6900+ status vs its US peer, as the Aud/Nzd cross reversed from circa 1.1076 through 1.1050 to keep the Kiwi propped either side of 0.6250.

GBP/CHF/CAD/JPY  

All marginally firmer against the Buck, though restrained well inside recent parameters, with Sterling straddling 1.2200 pre-Bailey and testimony from MPC member-in-waiting Dhingra to see whether the incoming voter leans dovishly or hawkishly. Meanwhile,  the Franc hovered most sub-0.9550, but held a firm line vs the Euro between 1.0076-26 bounds, irrespective of a marked deterioration in Swiss investor sentiment, the Loonie remained above 1.2900 against the backdrop of relative stability in oil prices and the Yen pivoted 136.00 with firmer than forecast Japanese retail sales countered by BoJ Governor Kuroda discounting the rise in core CPI to 2.1% and pledging to stay accommodative.

SCANDI/EM

The Nok got a boost from news that Norway's Industri Energi and SAFE labour unions reached a wage deal for oil drilling workers to avert a strike, but the Sek was cautious on the eve of the Riksbank following a slowdown in Swedish household lending and declines in all industrial and consumer sentiment indices. Elsewhere, the Rand slipped in tandem with Gold rather than gleaning any impetus from the SARB Governor stating that a 50 bp hike is not off the agenda, but the Rub was not ruffled by the CBR Chief refuting claims made by the Economy Minister that Russia is in a deflationary spiral or reaffirming more room to ease in lock-step with inflation and the Try weighed up a decline in Turkish economic confidence against removing the objection to Sweden and Finland joining NATO.

29 Jun 2022 - 10:09- Fixed IncomeData- Source: Newsquawk