EUROPEAN FX UPDATE: Dollar regroups as yields rebound from multi-month lows

Analysis details (10:16)

DXY

The Buck remained precarious on fundamental and technical grounds, but gleaned some traction from a deeper retreat in US Treasuries after their midweek spike. However, the Dollar index was restrained between 105.430-040 parameters and the Greenback traded in relatively tight confines against counterparts beyond the basket as well, awaiting clearer direction that might not appear before next week when the last major global Central Banks deliver their final policy decisions and forward guidance for 2022. In the interim, initial jobless claims are due and will be in focus given an otherwise sparse agenda.

GBP/JPY

Sterling and the Yen suffered more than most as the Dollar regained poise, with the former losing 1.2200+ status yet again and the latter retreating through 137.00 irrespective of an upward revision to Japanese Q3 GDP, albeit still contactionary on a q/q and annualised basis.

CAD/CHF/AUD/EUR/NZD

All handing back gains vs their US counterpart, and the Loonie to the extent that Usd/Cad returned to pre-BoC hike levels, while the Franc fell back below 0.9400, the Aussie towards 0.6700, the Euro sub-1.0500 and the Kiwi lost momentum around 0.6350. Note, Eur/Usd was ruffled by the latest sabre-rattling from Russia for a while, but will be looking for impetus from ECB President Lagarde from midday and/or 18.00GMT as she is scheduled to speak twice today.     

SCANDI/EM

In similar vein to the Eur, comments from the Riksbank via Floden and outgoing Governor Ingves could give the Sek some independent impetus as it treads cautiously alongside the Nok, but the Huf failed to derive any support from firmer than forecast Hungarian headline and core CPI as the trade deficit came in considerably wider than expected. Elsewhere, the Zar slipped with Gold regardless of significantly better than consensus SA current account data and the Czk took CNB remarks largely in stride (Zamrazilova contended that inflation should come down in Q2/Q3 next year, assuming no new shocks arise, and added the current level of rates is sufficient, but future hikes cannot be ruled out).

08 Dec 2022 - 10:16- ForexResearch Sheet- Source: Newsquawk