EUROPEAN FX UPDATE: Dollar remains robust as debt rout rages on

Analysis details (09:58)

DXY/GBP/EUR

The Buck briefly pared or reversed gains amidst some consolidation in bonds within the ongoing slide in futures and ramp in yields that saw certain benchmarks breach loftier psychological levels, but the index remained solid around the 113.000 handle after rebounding to eclipse Monday’s best and set a new high for the week at 113.370, thus far. Indeed, the Greenback retained a firm underlying bid on US specifics and the fragility of others for various factors, like the politically challenged and fundamentally flawed Pound. On that note, UK retail sales and public finance data highlighted Sterling’s economic plight hot on the heels of another dramatic day on Downing Street, as the former fell much more than forecast and the latter revealed deeper holes in public sector finances to plug. Predictably, albeit belatedly, Cable slipped to a marginal new w-t-d low sub-1.1200 and the 10 DMA (1.1191) circa 1.1123, while Eur/Gbp probed 0.8770 to set a fresh peak as the Euro found support ahead of 0.9750 vs the Dollar between a raft of hefty option expiries in Eur/Usd ranging from 0.9700 to 0.9840-50 (see 7.26BST post on the Headline Feed for full details). 

CNY-CNH/JPY      

Reports of intervention by major Chinese state run banks to stem the Renminbi’s depreciation and put a floor under the offshore Yuan at 7.2500 only really prevented Usd/Cnh from retesting record highs near 7.2800, and it seemed that Yen bears pounced on the perception that official Japanese action may prove futile or short-lived as well. Indeed, Usd/Jpy scaled another hurdle at 150.50 on the way to 150.94 and irrespective of claims by Japan’s Finance Minister Suzuki that speculators are being confronted and strictly dealt with, or the fact that Japanese headline CPI eclipsed consensus, at 3% y/y, and core inflation rose at the same pace for the strongest reading in eight years.

NZD/CAD/CHF/AUD   

All unable to avoid their US counterpart’s clutches, as the Kiwi faded further from 0.5700+ with little support from a narrower NZ trade deficit, the Franc extended losses through parity towards 1.0100, the Loonie lost impetus from oil and grasp of the 1.3700 handle pre-Canadian retail sales and the Aussie dipped under 0.6250 following comments from Australian Treasurer Chalmers overnight on the adverse impact of flooding. In short, he sees a 25 bp shaved from GDP growth in the December quarter, while they could add 10 bp to inflation in Q4 and Q1 next year.

SCANDI/EM

No protection from risk aversion via solid Swedish jobless rates for the Sek and little for the Try even though Turkish consumer sentiment improved as EMs across the board lost more ground to the Usd with only degrees of respite from intervention.

21 Oct 2022 - 09:58- EnergyData- Source: Newsquawk