EUROPEAN FX UPDATE: Dollar firmer as Yuan wanes and Yen holds in

Analysis details (10:19)

DXY

The Buck bounced broadly in wake of weaker than expected Chinese data and some unexpected PBoC easing that pushed Usd/Cny up towards 6.7700 from a 6.7410 midpoint fix and Usd/Cnh to 6.7800 precisely compared to a sub-6.7400 low. The disappointing macro releases also undermined broad risk sentiment overnight and high beta or activity currencies underperformed in response, but the Greenback also gained vs all index components bar the Yen to propel the DXY up from 105.540 to 106.200 ahead of the NY Fed manufacturing and NAHB housing market indices plus a speech from Fed’s Waller.

NZD/AUD/CAD

As noted above, the major losers given greater sensitivity to aversion and contagion in commodities, with the Kiwi under 0.6400 awaiting independent impetus from the RBNZ on Wednesday, the Aussie hovering below 0.7050 before RBA minutes and the Loonie trying to contain losses through 1.2870 in the run up to Canadian manufacturing sales, wholesale trade and the BoC’s latest Loan Officer Survey.

EUR/GBP/CHF 

All down against their US counterpart, and perhaps on positioning grounds in part as the Pound saw IMM specs cover shorts in BoE half point hike week to the least oversold levels since mid-March. Meanwhile, the Franc may have taken on board a rise in Swiss sight deposit balances at domestic banks and the Euro acknowledged a pretty pronounced retreat in EGB yields alongside technical impulses turning bearish after respecting/rejecting resistance during the post-US CPI Dollar downturn. Cable reversed from just shy of 1.2150 to circa 1.2070, Usd/Chf bounced from the low 0.9400 zone to 0.9460+ and Eur/Usd recoiled from around 1.0268 to test 1.0200.

JPY  

The G10 outlier on a mixture of risk and rate dynamics rather than fundamentals as Japanese GDP was not as strong as expected, but the Yen managed to remain mostly on a par with its US peer within a 133.59-132.91 band.

SCANDI/EM

A bearish start to the week for the Sek and Nok with additional pressure for the latter from Brent that tumbled over Usd 2/brl in tandem with WTI post-a significantly wider Norwegian trade deficit in advance of the Norges Bank policy meeting on Thursday. However, cheaper oil did not help the Try as Turkey’s budget deficit blew out more than two-fold, the Zar was rattled by Gold losing Usd 1800+/oz status and the Mxn by the aforementioned weakness in crude prices.

15 Aug 2022 - 10:19- Fixed IncomeData- Source: Newsquawk