EUROPEAN FX UPDATE: bulls grab Buck by the horns before BLS report

Analysis details (10:26)

DXY

Upside momentum has been building for a while, with the Dollar and index firmly bid on dips for several sessions and the latter forming a series of peaks near the 107.270 midweek high, but unable to breach the next long term objective at 107.310 from December 2002. However, once Wednesday’s best was taken out the flood gates opened and stops were triggered on a break of 107.500 to propel the DXY up to 107.790, irrespective of a looming major risk event in the form of NFP and the Yen retaining a safe haven premium for specific reasons. Perhaps the Greenback gleaned additional traction from latest Fed rhetoric, as Waller and Bullard stated or reiterated preferences for another 75 bp hike in July, though this wasn’t a surprise and this month’s FOMC minutes could arguably be construed as leaning that way anyway. So, it seems that the Buck was almost destined to advance further, especially as some of its peers are coming under pressure due to independent factors.

GBP/EUR

The Pound’s post-PM resignation relief rally or recovery virtually evaporated in the face of Dollar strength and stalled against the Euro on technical grounds as the Eur/Gbp cross tested and probed key and almost aligning technical levels, but failed to extend through, while Eur/Usd managed to contain declines below 1.0100 bang in line with a Fib. Specifically, 100 and 200 DMAs come in at 0.8447 and 0.8443 in Eur/Gbp today and 1.0072 in Eur/Usd represents a 76.4% retracement from all time peak to trough (1.6040-0.8228).

CAD/CHF/NZD/AUD

Having clawed back above the psychological 1.3000 mark vs its US rival with some fuel from a bounce in crude, the Loonie is labouring again between 1.3024-1.2953 parameters ahead of the Canadian-US jobs data head-to-head, while the Franc is holding just above 0.9800, the Kiwi is hovering around 0.6150 and the Aussie is treading water on the 0.6800 handle.

JPY

As noted earlier, the Yen bucked the broad trend following unique and sadly tragic event ahead of the weekend Japanese elections as former PM Abe renowned for his brand of economic policy amongst other things was shot during a campaign speech and subsequently died. Usd/Jpy remained suppressed within a 136.15-135.32 range alongside softer Yen crosses.

SCANDI/EM

Another downturn in Brent may have offset any impetus the Nok might have otherwise received via s slightly wider Norwegian trade surplus, while the Huf held off record lows in wake of stronger than expected Hungarian inflation metrics that will compound aggressive NBH tightening prospects, but the Try succumbed to more weakness after CBRT survey projections revealed another rise in year end Turkish CPI and decline in the Lira.

08 Jul 2022 - 10:25- Fixed IncomeData- Source: Newsquawk