EUROPEAN FX UPDATE: Dollar still deflated awaiting US CPI

Analysis details (10:30)

DXY

Another lame or dead cat bounce underscored the propensity for Buck depreciation in December and there appears to be little sign of it stopping the rot unless impending inflation data is hot and/or the Fed delivers sufficient hawkish guidance to spark a more meaningful recovery. For now, the Greenback remains grounded overall and the index is waning when above 105.000 having peaked and troughed within a 105.090-104.780 band compared to yesterday’s 105.250-104.660 range. Note, NFIB business optimism precedes CPI, but is unlikely to have too much influence, in contrast to the final leg of this week’s refunding comprising Usd 30 bn long bonds.

AUD/NZD

The Aussie and Kiwi took advantage of their US rival’s latest fade to the extent that Aud/Usd largely shrugged off declines in NAB business confidence and conditions, with some assistance from an upturn in Westpac consumer sentiment to rebound towards 0.6800 from sub-0.6750 awaiting commentary from RBA Governor Lowe. Meanwhile, Nzd/Usd probed 0.6400 from around 0.6373 in the run up to Q3 current account metrics and relatively stale fiscal updates overnight.

CAD/NOK

A change of fortunes for the Loonie and Nokkie due to some supply-side strength in crude oil, as WTI topped Usd 74.50/brl and Brent reached Usd 79.60/brl from lows just above Usd 70 and Usd 75 respectively last Friday. Usd/Cad recoiled just circa 1.3644 to almost 1.3600 and Eur/Nok reversed through 10.5000 irrespective of disappointing Norwegian GDP readings (mainland stagnant and overall economy in contraction).

GBP/EUR/JPY/CHF

All narrowly mixed against the Dollar, with Sterling marginally eclipsing 1.2300 at one stage, but not sustainably and deriving no real momentum from conflicting UK jobs and wage metrics in the same vein as the Euro in wake of a ZEW survey showing a beat in economic sentiment, worse than forecast current conditions and an improvement in expectations. Eur/Usd sat tight within 1.0561-28 confines. Elsewhere, the Yen extended its retreat to only 3 pips shy of 138.00 ahead of Japan’s Q4 Tankan release and the Franc pulled back further from the 0.9300 handle to 0.9375 following revised SECO forecasts on behalf of the Swiss Government - see 8.00GMT post on the Headline Feed for a snapshot and link to the full publication.

EM

Renewed weakness in the Cny and Cnh, as the latter tested 7.0000 vs the Usd again after reports that China will delay its economic policy meeting amid a surge in coronavirus cases, but the Try gleaned some traction from much stronger than expected Turkish IP and the Huf breathed a huge sigh of relief when Hungary and the EU resolved differences over the rule of law.

13 Dec 2022 - 10:30- Fixed IncomeData- Source: Newsquawk