EUROPEAN FX UPDATE: Dollar backs off as First Rep gets cash injection

Analysis details (10:00)

DXY   

Having been somewhat sidelined or submissive to moves elsewhere, such as the Franc in response to provisions made to save Credit Suisse and the Euro either side of the ECB, the Dollar was a bit more engaged with US related factors that underpinned broad risk sentiment, and namely the joint effort to rescue First Republic Bank. In short, eleven big US financial institutions clubbed together to give the regional bank Usd 30 bn and the equivalent of the amount of uninsured deposits held on March 15. So, another buffer for the banking sector and attempt to protect financial stability. The Greenback softened across the board and the index dipped below 104.000 between 104.440-103.890 parameters before regrouping ip data and preliminary Michigan sentiment with some outside help from a Yuan wobble on the back of the PBoC’s 25 bp RRR cut.

NZD/AUD

No real shock that the high betas took advantage of the ongoing recovery in risk appetite having been hit so hard when the market mood was much gloomier, but the Kiwi topped out above 0.6250 and the Aussie failed to clear the 21 DMA at 0.6720 convincingly following Westpac revising its call for the RBA to stand pat in April rather than hike again and also tapering its terminal rate view to 3.85% from 4.10% previously.

JPY/EUR/CHF/CAD/GBP 

All firmer vs the Buck, albeit to varying degrees, as the Yen derived extra impetus from a retreat in Treasury yields to probe 132.75 from around 100 pips lower at one stage, while the Euro extended post-ECB hike gains to circa 1.0669 after several GC members underlined the need for more rate rises on the basis that inflation remains too high and likely to remain well above target for sometime without further tightening. Elsewhere, the Franc rebounded from just under 0.9300 to 0.9250+ at best, the Loone reclaimed 1.3700+ status ahead of Canadian PPI and the Pound consolidated on the 1.2100 handle irrespective of hefty declines in UK inflation expectations per the latest quarterly BoE/Ipsos survey.

SCANDI/EM

The Sek and Nok benefited from the aforementioned pick-up in sentiment, but the former was hampered by an unexpected jump in Sweden’s sa jobless rate, while the Try was undermined by a rise in the year end forecast for Turkish CPI, in contrast to the Zar that was boosted by Gold’s advance through Fib resistance towards Usd 1935/oz and the Cnh/Cny that took the PBoC’s RRR reduction largely in stride.  

17 Mar 2023 - 10:00- Fixed IncomeData- Source: Newsquawk