EUROPEAN FX UPDATE: Buck pressured pre-CPI in the face of resurgent Yen

Analysis details (10:10)

DXY/JPY

The Dollar and index retained an underlying bid as the clock ticked down to pivotal US CPI metrics, with the latter keeping close tabs on the 103.000 level after a dip to 102.960 and test of Monday’s w-t-d base only a fraction below. However, the DXY remained some way off best levels amidst a strong recovery in the Yen on Yomiuri reports that the BoJ will review the side effects of its massive monetary easing at next week’s policy meeting given skewed market interest rates despite December’s YCT tweak, with the inference that it could be preparing to expand the range further. Usd/Jpy reversed sharply in response from 132.48 to probe 131.00 and from Wednesday’s peak closer to 133.00, irrespective of Japan’s Economy Watcher’s Poll index and the BoJ maintaining its economic assessment for 5 out of 9 regions, albeit the rest upgraded.

GBP/EUR/AUD

Narrowly bid against the Greenback, as Sterling secured a tighter grasp of the 1.2100 handle, the Euro established a stronger platform around 1.0750 and the Aussie rebounded through 0.6900 where a Fib retracement level resides nearby. The Pound may have gleaned some positives from robust UK supermarket sales over the Xmas/New Year period, while the Euro was underpinned by more hawkish-leaning ECB rhetoric and the Aussie drew encouragement from a wider than expected trade surplus.

CHF/CAD/NZD

The Franc pared some of its heavy losses from almost 0.9350 and 1.0050 in Usd/Chf and Eur/Chf terms respectively, but more in consolidation and corrective price action than anything new from a fundamental perspective, while the Loonie continued to meander inside 1.3400-50 parameters and the Kiwi either side of 0.6350 with little reaction to a decent rebound in NZ building consents.

SCANDI/EM

Data hardly impacted the Nok either as Norwegian mainland GDP matched consensus and the overall measure only returned to mild monthly growth from hefty contraction, but the Cny and Cnh forged more gains vs the Usd off another strong PBoC midpoint fix and regardless of mixed Chinese CPI and PPI data (former firmer than previous and as forecast, but latter nowhere near as firmer as anticipated even though less negative than the prior level).

12 Jan 2023 - 10:10- Fixed IncomeData- Source: Newsquawk