EUROPEAN FX UPDATE: Euro and Pound take the strain as Buck continues to reign

Analysis details (10:16)

DXY/EUR/GBP

The Dollar is mixed against majors, but mostly firm vs index components and especially the Euro amidst ongoing concerns about contagion from the conflict between Russia and Ukraine. Hence, Eur/Usd and the DXY are moving in lock-step with the former edging closer to its 2020 low and the latter inching nearer to the next psychological level at 102.000. Looking at prices in more detail, the headline pair briefly breached interim support on some charts at 1.0680 to nudge the index up to 101.960, or vice-versa as the inverse correlation is currently too close to call. Interestingly, while Fed officials observe pre-FOMC vows of silence, ECB’s Kazaks was the latest to talk hawkishly about the potential for rates to end the year positive, but the Euro failed to derive any lasting momentum or traction. In terms of what lies ahead, US durable goods, consumer confidence and new home sales are due before the first of this week’s Treasury auctions comprising Usd 48 bn 2 year notes. Elsewhere, the Pound also remains under pressure, albeit holding off recent lows sub-1.2700 against the Greenback and not far from 0.8450 vs the Euro as broad risk sentiment recovers after Monday’s pretty pronounced FTQ.

AUD/NZD/JPY   

It’s tempting, but probably too obvious to suggest that the Aussie and Kiwi regained poise due to the re-opening of markets after Anzac Day, so the former likely gleaned more impetus from elsewhere, like China where the Yuan has clawed back more declines in wake of yesterday’s PBoC RRR cut. However, Aud/Usd appears top heavy above 0.7200 and perhaps wary of hefty option expiry interest residing at 0.7220 (1.22 bn), while Nzd/Usd ran into some resistance ahead of 0.6650 as the Aud/Nzd cross pivots 1.0850. Meanwhile, the Yen continues to consolidate following its sharp slide against the backdrop of another dip in UST yields, with Usd/Jpy under 128.00 in wake of upbeat Japanese jobs data and confirmation of Yen 6.2 tn relief measures.

CAD/CHF

Some protection for the Loonie from weaker crude via hawkish commentary from BoC Governor Macklem, but Swiss trade did not offer the Franc much support as the surplus narrowed and key watch exports slowed. Usd/Cad is hovering below 1.2750 and Usd/Chf is just shy of 0.9600.

SCANDI/EM      

The Sek is still holding up better than the Nok pre-Riksbank, as the latter remains depressed alongside Brent, while the Huf is hoping for something positive from the NBH beyond an expected 100 bp hike.

26 Apr 2022 - 10:15- Fixed IncomeResearch Sheet- Source: Newsquawk