EUROPEAN FX UPDATE: Dollar mixed vs majors and mainly rangy

Analysis details (09:38)

DXY

The Greenback retains the bulk of its post-NFP gains and upward momentum, but not right across the G10 board as certain cyclical, commodity and activity currencies marginally outperform, albeit in relatively narrow and familiar confines. The index holds above 98.500 within a 98.517-713 range in wake of more Fed officials giving a nod to 50 bp hikes, starting at the May FOMC when balance sheet reduction is also likely to begin. More immediately, US factor orders are due and expected to fall in February after a decent rise previously.

NZD/AUD/CAD/GBP

All firmer vs the Buck, with the Kiwi comfortably above 0.6900 and Aussie still pivoting 0.7500 in advance of AIG’s construction index, the final PMIs and RBA policy meeting that may come with a tweak to guidance on rates from patience to more probability of a hike before the year bows out. Elsewhere, the Loonie continues to straddle 1.2500 against the backdrop of relative stability in oil and ahead of Canadian building permits data plus the business outlook for future sales, and Sterling is maintaining 1.3100+ status, albeit off best levels having probed the 21 DMA at 1.3130 today before BoE commentary via Governor Bailey dovish MPC dissenter Cunliffe.

CHF/JPY/EUR       

The Franc is still rotating around 0.9250 in Dollar terms, but firming towards 1.0200 against the Euro irrespective of a big jump in Swiss sight deposits at domestic banks that suggests the SNB was significantly active the latest reporting week, while the Yen seems to have settled into a narrower band either side of 122.50 and Euro is fading with broad risk sentiment following a pop over 1.1050. Note, decent option expiry interest from 1.1000-10 (1.1 bn) may be exerting a gravitational pull, while Eur/Usd is also being dragged down by widening EGB/UST yield differentials and contagion from ongoing Russia-Ukraine hostilities that has manifested in a much weaker than forecast Sentix index most recently.

SCANDI/EM

A bounce in Brent is offering the Nok some protection from risk aversion, while the Huf seems content with political stability in Hungary after PM Orban’s Fidesz Party romped to victory and handed him a fourth term in office. Conversely, yet more inflation issues for the Try to contend with as Turkish CPI accelerated past 61% y/y and PPI almost hit 115% y/y in March.

04 Apr 2022 - 09:38- Fixed IncomeData- Source: Newsquawk