EUROPEAN FX UPDATE: Dollar in dire need of some retail therapy

Analysis details (10:17)

DXY

It may take a significant upside beat to turn things around for the Greenback given the erratic nature of retail sales data, so comments from Fed’s Waller could well be more influential in terms of arresting the ongoing slide that tipped the index below its prior 2023 base overnight. Indeed, the Buck remained top-heavy almost across the board in the run up and the DXY hovered mostly below 101.000 between 101.010-100.780 parameters amidst further yield convergence in US Treasuries and EGBs, while funding currencies like the Yen and Franc continued to benefit from the less hawkish US rate outlook that kept the curve on a steeper trajectory. Also to come, remarks from the more dovish sounding Fed’s Goolsbee, ip and preliminary Michigan sentiment with updated inflation expectations.

JPY/CHF/EUR/CAD

Although new BoJ Governor Ueda underscored the need to keep the status quo on monetary policy in his latest speech, the Yen consolidated recovery gains within a 132.64-18 range vs its US counterpart, the Franc held above 0.8900, the Euro posted a minor new y-t-d peak at 1.1075 and the Loonie maintained bullish momentum between 1.3343-18 bounds ahead of Canadian manufacturing sales.

NZD/GBP/AUD

The Kiwi lost some thrust after breaching 0.6300 and the100 DMA against its US rival, and shrugging off a retreat in the NZ manufacturing PMI to sub-50 territory along the way, but outpaced the Aussie following relatively upbeat commentary from Finance Minister Robertson who said New Zealand has headroom on the balance sheet with borrowing below 20% of GDP, and the inflation impact from the rebuild post-Gabrielle may be less than feared. In fact, Aud/Nzd pulled back to probe 1.0750 as Aud/Usd faded ahead of 0.6800 that aligned with its 100 DMA. Elsewhere, Sterling waned on approach towards 1.2550 and lost more ground relative to the Euro as Eur/Gbp eyed 0.8850 in advance of a speech from renowned BoE dove Tenreyro.

SCANDI/EM

Softer than expected Swedish inflation metrics did not ruffle the Sek that much as the core readings were stickier than the headline, but the Sgd was undermined by a surprise decision by the MAS to stand pat on all aspects of its policy settings on the bases that it sees core inflation easing materially by the end of this year. Meanwhile, the Zar lost impetus alongside Gold and with Eskom still load-shedding due to generation capacity constraints, but the Cnh and Cny both tested resistance around 6.8500 vs the Usd with some assistance via another uptick on the PBoC midpoint fix.

14 Apr 2023 - 10:17- Fixed IncomeData- Source: Newsquawk