EUROPEAN FX UPDATE: firm Franc revival amidst hopes of CS survival

Analysis details (10:01)

CHF/DXY/EUR

A marked change of fortunes for the Franc in tandem with ailing Swiss bank, Credit Suisse, as the SNB and FINMA rode to the rescue with funding of up to Chf 50 bn via the covered loan and short term liquidity facilities. Usd/Chf reversed sharply in response and relief from circa 0.9343 to 0.9231, while the Eur/Chf cross retreated towards 0.9800 from the high 0.9800 area even though the Euro also breathed a hefty sigh of relief on the basis of less financial sector contagion. Moreover, Eur/Usd rebounded further from Wednesday’s low near 1.0500 to regain 1.0600+ status as attention reverted to the upcoming ECB policy meeting and a bit more conviction about prospects of a 50 bp hike rather than 25 bp or no move at all, and this weighed on the Dollar in index terms as it lost momentum and safe haven premium within a 104.700-200 range awaiting US housing data, claims import and export prices plus the Philly Fed.

JPY/AUD/CAD/GBP

In contrast to the Greenback, the Yen retained an underlying bid between 132.51-133.49 parameters and perhaps in acknowledgement of Japan posting a narrower than forecast trade deficit in February and machinery orders blitzing consensus over the month before, while the Aussie secured a solid grip of the 0.6600 handle in wake of better than expected labour market metrics to end a run of two successive downbeat jobs reports. Elsewhere, the Looonie straddled 1.3750 ahead of Canadian wholesale trade and the Pound faded following a pop over 1.2100 to sub-1.2050 at one stage in the absence of anything UK-specific.

NZD

Another blow for the Kiwi following the wider than anticipated Q4 NZ current account gap as GDP contracted considerably more than feared q/q and ASB revised its outlook for the RBNZ to a 25 bp hike in April from 50 bp as a result. Nzd/Usd recoiled from 0.6191 to 0.6140 at worst and Aud/Nzd bounced to 1.0784 from 1.0701 accordingly.

SCANDI/EM 

The Sek regained poise with general risk sentiment and a rise in 1 year Swedish money market inflation expectations, but the Nok remained depressed in wake of confirmation that Norwegian mainland GDP fell 0.2% m/m and irrespective of some encouraging snippets in the latest Norges Bank regional network report (see 9.00GMT post on the Headline Feed for details and a link to the full survey). Meanwhile, most EM currencies settled down after Wednesday’s collapse, but the Try was hampered by Turkish floods adversely affecting the recovery from quake effort.

16 Mar 2023 - 10:01- Fixed IncomeData- Source: Newsquawk