EUROPEAN FX UPDATE: Buck turns a bit more mixed awaiting FOMC, NFP etc

Analysis details (10:08)

DXY  

The Dollar has eased back from best levels that saw the index top 103.500, but fall short of Friday’s 103.630 high that in turn was lower than the new mutli-year and cycle peak at 103.930 set on the eve of month end. However, the Greenback remains relatively firm and solid from a positional perspective as spec longs increased positions in the latest IMM accounting week (between April 20-26), largely at the expense of the Euro and Pound, anticipating the Fed to deliver this week on rates and by kicking off QT. Prior to that, the US manufacturing ISM will likely overshadow the final manufacturing PMI and construction spending, while a packed week to start the new month wraps up with the monthly BLS report. Back to the DXY, 103.530-100 covers trade thus far and amidst holiday-thinned volumes due to market closures in China, the UK and other places across Asia.

NZD/AUD/CAD/JPY/EUR   

Aud/Nzd headwinds continue to hamper the Kiwi more than NZ specifics it seems, as the cross straddles 1.0950 in advance of the RBA tomorrow amidst heightened expectations of a much earlier than previously signalled rate hike. Nzd/Usd is pivoting 0.6450 ahead of building consents for the month of March tonight and Q1 jobs data alongside labour costs on Tuesday, while Aud/Usd is anchored around 0.7050 in wake of an uptick in the Aussie manufacturing PMI. Elsewhere, weakness in WTI (just over Usd 101/brl compared to Usd 105+) is weighing on the Loonie before Canada’s manufacturing PMI as Usd/Cad sits mostly above 1.2850, the Yen is still trying to regroup after its slide through 131.00 last week and rotating either side of 130.00 and the Euro is attempting to form a base on the 1.0500 handle post-mixed Eurozone manufacturing PMIs, downbeat accompanying commentary and sub-forecast sentiment indicators.

GBP/CHF  

No real rhyme or reason, but the Pound is holding mainly in the upper end of a 1.2540-97 range and rebounded from just under 0.8400 vs the Euro in the absence of many domestic participants out for the early May Day long weekend, while the Franc has defended 0.9750 against the Buck even though Swiss consumer sentiment deteriorated sharply in Q2, as weekly sight deposit data shows a dip in balances at domestic banks.

SCANDI/EM

The Sek and Nok are both weaker on the back of broad risk aversion and irrespective of contrasting Swedish and Norwegian manufacturing PMIs as outperformance in the latter is more than offset by a retracement in Brent towards Usd 103.50/brl from Usd 107.42 at one stage. Meanwhile, the Cnh narrowly survived another test of 6.7000 vs the Usd after worse than feared Chinese PMIs, services and composite in particular.

02 May 2022 - 10:08- Fixed IncomeData- Source: Newsquawk