EUROPEAN FX UPDATE: Dollar fairly defiant in the face of overt or covert intervention

Analysis details (10:04)

DXY/JPY

Treasury yields eased back from fresh highs and the Buck lost a bit of momentum as a result, with the index retreating from 107.240 to 106.870, but the Greenback remained relatively resilient overall given more official selling from various Central Banks or Government institutions acting to curb currency depreciation. On that note, the RBI, BI, BoT and no doubt Turkish state banks were all either openly intervening or signalling intent, but Japan inc stuck to the no comment retort when asked if the BoJ or MoF pounced on the pop in Usd/Jpy when it finally scaled 150.00. However, the manner and magnitude of the post-US JOLTS reversal suggested otherwise and the headline pair pulled back from 149.31 to 148.74 alongside the aforementioned bounce in USTs rather than upgrades to final Japanese services and composite PMIs. Conversely, ADP and the services ISM could easily give the flagging Dollar a fillip if above expectations, like job openings and the manufacturing survey.  

AUD/NZD

The Aussie may have gleaned some independent traction from considerably upward revisions to the services and composite PMIs, but also a swing in Aud/Nzd cross flows from 1.0662 to 1.0700+ in wake of the RBNZ matching the RBA and consensus for no change in rates and sounding a tad less hawkish or not as upbeat on economic prospects as it could have been. In short, the Bank acknowledged that GDP growth in the June quarter was stronger than anticipated, but said the economic outlook remains subdued. Hence, Nzd/Usd faded from 0.5922 to 0.5872, while Aud/Usd rebounded from 0.6287 to 0.6326.

EUR/GBP/CHF/CAD

Eurozone services and composite PMIs were mostly better than forecast or originally estimated and the Euro might have been encouraged by the fact that it held above 1.0450 against its US counterpart as well, while the Pound was boosted by pretty notable upgrades to the final UK services and composite PMIs that pushed the former close to the 50.0 threshold. Accordingly, Eur/Usd probed the top end of option expiry interest between 1.0475-85 (1.3 bn) and Cable retested/reclaimed the psychological 1.2100 level compared to a sub-1.2050 trough. Elsewhere, the Franc and Loonie were more reliant on their US rival’s relapse when recovering some recent losses from 0.9232 and 1.3724 to probe 0.9200 and 1.3700 respectively.

SCANDI/EM      

The Sek simply cannot catch a break and an even more contractionary Swedish services PMI was the latest straw, while the Nok was hardly helped by further consolidation in Brent well off recent peaks and the Pln traded defensively pre-NBP for fear of another very dovish surprise.

04 Oct 2023 - 10:04- Fixed IncomeData- Source: Newsquawk