EUROPEAN FX UPDATE: contained and cagey trade awaiting US CPI

Analysis details (10:02)

DXY

Very little movement in currency markets as far as major pairings are concerned, and this could clearly be down to caution ahead of Wednesday’s headline event in the form of US inflation data. However, the Dollar remained underpinned within familiar ranges and the index elevated just above 101.500 between 101.510-730 parameters having regained composure yesterday, and with some impetus from Fed’s Williams warning against pricing in a pause prematurely. On the flip-side, no progress on the debt ceiling left the Greenback vulnerable to default risk awaiting the next round of talks scheduled for Friday.

CHF/GBP/JPY

All fractionally firmer vs the Buck, but subject to change on a whim given the edgy tone pre-CPI, as the Franc narrowly straddled 0.8900, Sterling maintained 1.2600+ status on the eve of the BoE and the Yen hovered below 135.00 following offers overnight that kept Usd/Jpy afloat before a test of the 200 DMA at 135.47. Back to the Pound, firmer Gilt yields may have provided a prop more so than the Times’ shadow MPC voting 7-2 in favour of a 25 bp hike and with the two dissenters arguing the case for 50 bp, as the real Committee is widely anticipated to see dovish dissent again.  

NZD/EUR/CAD/AUD

At the opposite end of an admittedly narrow spectrum, the Kiwi hovered on the 0.6300 handle against its US counterpart, the Euro held just above 1.0950 and below 1.1000 with eyes still trained on a Fib at 1.0959, the Loonie meandered just over 1.3400 in advance of Canadian building permits and the Aussie inside a tight 0.6774-50 band.

SCANDI/EM   

A change in direction for the Sek relative to the Nok as the former was undermined by weak Swedish new manufacturing orders, but the latter rallied in wake of hotter than expected Norwegian headline and core CPI. Elsewhere, the Huf maintained bullish momentum even though Hungarian inflation metrics marginally missed consensus, but the Try failed to get any respite from Turkish ip holding up a lot better than feared as the overriding focus stayed firmly on the upcoming election. 

10 May 2023 - 10:02- Fixed IncomeData- Source: Newsquawk