EUROPEAN FX UPDATE: Euro eases into ECB after Wednesday’s exertions

Analysis details (09:48)

EUR

Some payback for the Euro following its meteoric midweek recovery rally and resurrection from conflict contagion depths, as the overall risk turns a bit bearish again and markets brace for a potentially big day in terms of the Russia/Ukraine situation, ECB policy guidance and March FOMC lift-off prospects via US CPI data. Moreover, Eur/Usd may be losing some momentum after falling just shy of 1.1100 and retreating through a key technical level at 1.1060 (Fib retracement) towards decent option expiry interest at the 1.1000 strike (1.59 bn). However, a lot could change in a short space of time before the NY cut and for the Euro specifically or independently the aforementioned ECB event, including President Lagarde’s post-meeting press conference could be a decisive factor.

DXY

It goes without saying that the Dollar index has regained some poise as the Euro wanes given their close inverse correlation, so no surprise to see the index back on a firmer footing around 98.000 after its unceremonious dump on Wednesday, but the same applies for the Buck looking forward in context of the next big move or directional push likely to come from any of the above. DXY currently tucked inside a 98.300-97.963 band. 

AUD/NZD

Trade remains very volatile, but the high betas retain a bid tone after yesterday’s pronounced revival in risk appetite with some additional traction from the ongoing strength in commodities. The Aussie is firmly back above 0.7300 vs the Greenback as a result and the Kiwi is attempting to breach resistance circa 0.6850 in advance of NZ manufacturing PMI and more comments from RBA Governor Lowe, this time at a banking conference. 

GBP/CHF/JPY/CAD

All softer and still edgy vs their US counterpart awaiting clearer pointers, with Sterling holding mostly in the upper half of a 1.3100-1.3200 range, the Franc meandering between 0.9284-56, Yen pivoting 116.00 and keeping its head above the almost aligning twin y-t-d troughs at 116.34-35 and Loonie hovering just under 1.2800 with some fuel from a partial rebound in crude prices.

SCANDI/EM

The Nok has not gleaned much traction from stronger than forecast Norwegian inflation readings as it continues to reel in wake of the capitulation in Brent, while the Huf has been hampered by the NBH opting to hike the 1 week depo rate by 50 bp vs +65 bp consensus. Conversely, the Rub has rebounded in hope of something positive from the latest peace talks between Russian and Ukrainian officials rather than China widening the Yuan band relative to the Rouble to 10% from 5% wef March 11, as the Kremlin says the Lavrov-Kubalev meeting could pave the way for Putin and Zelensky to speak.

10 Mar 2022 - 09:48- Fixed IncomeData- Source: Newsquawk