EUROPEAN FX UPDATE: Dollar on a higher plane ahead of JP at JH

Analysis details (09:49)

DXY/EUR

Having extended gains on a mixture of data, rising yields and Fed speak yesterday, the Buck maintained bullish momentum and the index advanced further above the 104.000 handle, to 104.310 before pulling up just shy of a series of highs spanning the end of May and early June. The Greenback also cleared several psychological barriers and technical hurdles against its peers, like the 200 DMA and 1.0800 vs the Euro that remained depressed in wake of a rather timely ECB sources story suggesting that consensus is growing for a pause in the tightening cycle as recession concerns mount - see 8.34BST post on the Headline Feed for more. Eur/Usd hovered towards the base of a 1.0767-1.0815 range and veered away from a band of decent option expiries spanning the aforementioned round number to 1.0850 (1.3 bn between 1.0800-10, 1.9 bn at 1.0825 and 1.4 bn at the half round number to be precise), with additional pressure on the headline pair (and Euro crosses) emanating from a weaker than forecast German Ifo survey. However, all could change by the end of Friday’s session pending the tone from Fed Chair Powell initially and then ECB President Lagarde at the Jackson Hole Symposium. Prior to that, final UoM findings and inflation expectations could provide some impetus.

NZD/CHF/JPY/GBP

All softer against their US rival, with the Kiwi in danger of losing sight of 0.5900 in the face of stronger Aud/Nzd headwinds, the Franc falling deeper beneath 0.8800 through 0.8850, the Yen under 146.00 following mostly softer than consensus Tokyo CPI metrics and Sterling suppressed below 1.2600 irrespective of a bigger than anticipated improvement in UK consumer confidence per GfK.

AUD/CAD

Both narrowly mixed vs their US peer and deriving some underlying support via relative strength in commodities, as the Aussie stayed afloat of 0.6400 and the Loonie regained poise after another sub-1.3600 dip.

SCANDI/EM

Some good news for the ‘undervalued’ Sek given steep declines in Swedish unemployment rates, while the Cny and Cnh got something tangible by way of support measures for China’s ailing real estate sector - nationwide guidance on the easing of mortgage rules, including details for conditions to qualify for first-home mortgage rates depending on the number of homes owned rather than the previous mortgage record. Conversely, the Try succumbed to payback after Thursday’s post-CBRT hike exuberance and a sobering fall in Turkish manufacturing sentiment.

25 Aug 2023 - 09:48- Fixed IncomeData- Source: Newsquawk