EUROPEAN FX UPDATE: Buck remains buoyant ahead of GDP and Euro weak pre-ECB

Analysis details (09:59)

DXY/EUR/JPY

Having secured a firmer grasp of the 106.00 handle before advancing through 106.50, the Dollar index picked up where it left off yesterday and breached more recent highs on the way to reaching 106.880. However, there was one more hurdle protecting the psychological 107.00 level in the form of the peak from October 6, at 106.970 and the Greenback was derailed by what could be described as stealth intervention in Usd/Jpy that resulted in the headline pair dropping from 150.77 to sub-150.00 in a double quick time. Nevertheless, the retreat was almost reversed as rapidly and the DXY remained ‘comfortably’ above its 106.520 low amidst broad weakness within the basket. Indeed, the Euro lost more ground beneath 1.0600 awaiting the ECB for direction, if not a lifeline as rates are widely expected to be left unchanged after the ‘surprise’ hike last time - see 9.04BST post on the Headline Feed for our preview of the upcoming event. Eur/Usd pivoted 1.0550 and was flanked by another raft of decent option expiries ranging from 1.0540-50 to 1.0700 ahead of the NY cut and key US data including the first look at Q3 GDP, durable goods for the month of September and the more timely jobless claims updates (weekly feeding into this month’s NFP report).

CHF/GBP/CAD

All made way as the Buck went from strength to strength, but off worst levels after the Franc managed to keep afloat of 0.9000, just, the Pound held above 1.2050 and its m-t-d trough and the Loonie maintained sight of 1.3800 in the aftermath of Wednesday’s hawkish BoC hold.

NZD/AUD

The Antipodean Dollars were undermined by ongoing risk aversion as well as their US rival’s resurgence to the extent that Nzd/Usd reversed from 0.5812 to 0.5774 at one stage and Aud/Usd to 0.6271 from 0.6314. Moreover, the Aussie continued to unwind its CPI inspired gains following remarks from RBA Governor Bullock that were arguably dovish-leaning or cast doubt over November tightening prospects as she said the Board is still analysing the Q3 inflation metrics and is undecided whether they constitute a material change in the outlook that warrants a rate increase.

SCANDI/EM

Conflicting Swedish trade, household lending and sentiment hardly impacted and the Sek also took a new Riksbank lending facility for central counterparts in the RIX-RTGS clearing system largely in stride, while the Nok failed to fully appreciate a dip in Norway’s LFS unemployment rate given the softer tone in Brent crude. Elsewhere, the Cny and Cnh were hampered by overall Usd strength, but the latter contained declines sub-7.3300 as China’s Commerce Ministry contended that the recovery in consumption has become more obvious since Q3, and the Try trod cautiously under 28.0000 in the hope of a boost from the CBRT via an aggressive hike (consensus range 250-500 bp).

26 Oct 2023 - 09:58- Fixed IncomeData- Source: Newsquawk