EUROPEAN FX UPDATE: Dollar remains dominant irrespective of ongoing intervention

Analysis details (10:09)

DXY

The Buck stood firm in the face of further downside pressure from various Central Banks and other institutions acting on their behalf in an effort to support individual currencies, but also amidst relatively pronounced bull-flattening in US Treasuries compounded by multiple blocked sales of 5 year note futures against bonds reported during the overnight session. Indeed, the Greenback absorbed selling against the Yuan, Rupee and Rupiah and also took a largely unexpected BoT 25 bp hike to prop up the Baht largely in stride. Meanwhile, the Dollar index maintained 106.000 status after notching a new, albeit marginal 2023 high between 106.160-320 parameters ahead of more remarks from Fed’s Kashkari and US durable goods data.

AUD/NZD/EUR

All under pressure or fading against their US counterpart, with the Aussie unable to glean independent impetus from firmer, but in line with forecast monthly CPI metrics, the Kiwi losing momentum in the absence of any NZ specifics and the Euro hardly helped by weaker than expected Eurozone M3 ‘growth’. Aud/Usd retreated through 0.6400 yet again and may have been wary about topside option expiry interest given 1 bn rolling off from 0.6420 to 0.6430, Nzd/Usd drifted down around the 0.5950 axis and away from 1.3 bn expiries at the 0.5945 strike, while Eur/Usd languished below 1.0600 and was flanked by 1.5 bn between 1.0600-05 vs 1.6 bn at 1.0515-10.

CHF/GBP

Little respite for the Franc via an improvement in Swiss investor sentiment or Sterling as dovish SNB and BoE policy reverberations continued to keep Cable depressed sub-1.2200 and Usd/Chf elevated mostly above 0.9150.

JPY/CAD

Relative outperformers, or displaying a bit more resistance against their US rival with the Yen benefiting from softer UST yields to an extent and the Loonie from a fairly firm rebound in oil prices. Usd/Jpy pivoted 149.00 and Usd/Cad hovered above 1.3500.

SCANDI/EM

The Sek shrugged off mixed Swedish sentiment indicators, a sharp swing from trade surplus to deficit and slower household lending as it extended its already impressive technical recovery vs the Eur on the crest of Riksbank FX reserves hedging, while the Nok bounced in tandem with Brent even though Norway’s LFS jobless rate ticked up. Elsewhere, more PBoC midpoint fix support for the Cny and Cnh by association, but gains capped by Fib and DMA resistance, not to mention the broadly strong Usd.

27 Sep 2023 - 10:09- Fixed IncomeData- Source: Newsquawk