EUROPEAN FX UPDATE: calmer, cagier trade in the run up to US CPI

Analysis details (09:57)

DXY

The Dollar was choppy in the immediate aftermath of September’s FOMC minutes, as the accounts revealed some less hawkish nuances within the central message that officials see the need to get to and maintain a more restrictive stance to meet the goal of bringing down elevated inflation. Specifically, some participants believe that risks will become more two-sided as this happens, while others noted that it would be important to calibrate the pace of further tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook. However, overall guidance remains unchanged and underlined by the fact that Fed rate expectations hardly budged, not to mention the index holding within range and subsequently settling into a tighter 113.070-450 band, awaiting US inflation data for further impetus.

CHF/GBP

It’s marginal given relatively little deviation in Buck/major pairings as alluded to above, but the Franc and Pound lost a bit more ground than their peers as US Treasuries traded defensively pre-CPI and Sterling trod cautiously ahead of Friday’s expiration of BoE backstop measures designed to restore normality in UK debt and financial markets. Usd/Chf rebounded to probe parity again and Cable retreated towards 1.1050, with the former largely shrugging off mixed Swiss producer and import prices and the latter discounting the latest BoE credit conditions survey that was compiled before all the post-mini budget mayhem.

NZD/JPY/AUD/EUR/CAD

All idling and barely moved vs their US counterpart, as the Kiwi hovered above 0.5600 in advance of the NZ manufacturing PMI, the Yen kept its head afloat of 147.00 and hefty option expiry interest over the round number at 147.25 (1.9 bn), the Aussie remained capped under 0.6300 amidst renewed weakness in the Yuan, the Euro pivot 0.9700 and the Loonie defend 1.3850 between narrow 1.3837-00 confines.

SCANDI/EM

Only a fleeting fillip for the Sek via stronger than expected Swedish inflation metrics as technical support on some charts stood firm and 11.0000 vs the Eur retained magnetism, while 7.2000 in Usd/Cny and Usd/Cnh also retained influence following a considerably lower than spot PBoC midpoint fix overnight. Elsewhere, intervention kept a layer of protection around the Hkd and Inr.

13 Oct 2022 - 09:57- Fixed IncomeData- Source: Newsquawk