EUROPEAN FX UPDATE: fast and furious finale to month, quarter and half year

Analysis details (10:10)

DXY

The Dollar index formed a firmer base around 105.000 within a relatively tight 105.190-104.870 range that did not really tell the full story or give a true reflection of the moves in individual pairings and volatile price action beyond the basket. Moreover, many anticipate further flurries and potential upside for the Greenback as residual rebalancing requirements are fulfilled over the regular daily fixing times on the last trading day of June, Q2 and H1, not to mention reaction to top tier data in the form of PCE price metrics and the Chicago PMI, plus broader safe-haven demand as risk sentiment remains gloomy.

JPY/GBP/NZD/AUD

A decent recovery rally for the Yen, irrespective of worrying Japanese ip readings overnight, partly on the aforementioned risk-off dynamic that has boosted Treasuries and also due to some technical retracement, as Usd/Jpy hit resistance bang on 137.00 and reversed through 136.00 at one stage, albeit fractionally. Meanwhile, Sterling held just above 1.2100 before revisiting 1.2150+ terrain regardless of UK macro releases revealing softer Nationwide house prices, an unrevised final Q1 GDP print and downbeat Lloyds business barometer, the Kiwi rebounded from around 0.6200 following deterioration in NBNZ business outlook and own activity gauges and the Aussie found support into 0.6850 with some external assistance via encouraging Chinese PMIs.

EUR/CAD/CHF   

The current major laggards, as the Euro failed to regain momentum having closed below a key chart level on Wednesday (1.0457 Fib) and saw further slippage towards 1.0400 against the backdrop of softer EGB yields vs US or UK to tip Eur/Gbp back under 0.8600, while the succumbed to a bit of payback following recent outperformance, with Usd/Chf back on the 0.9500 handle in contrast to Eur/Chf remaining beneath par. Elsewhere, the Loonie lost traction from oil and its battle to defend 1.2900 in the run up to monthly Canadian GDP, as WTI settled into a Usd 2/brl band around Usd 109 after recoiling nearly Usd 5 from Usd 114.05 yesterday.

SCANDI/EM    

A hawkish hike from the Riksbank given guidance for another 125 bp or so worth of tightening by the end of 2022 and a sharp reduction in the pace of asset purchases in H2, but no real spike in the Sek due to the lack of risk appetite in general, and perhaps the fact that a 50 bp repo rate rise was all priced in. The Try was undermined by a wider Turkish trade deficit and the Huf handed back some post-NBH gains after the 1 week depo was lifted 50 bp in contrast to the Cnh and Cny that climbed on the back of China’s services PMI topping forecasts and more than offsetting a weaker than expected PBoC onshore midpoint reference rate.

30 Jun 2022 - 10:10- EnergyData- Source: Newsquawk