EUROPEAN FX UPDATE: Franc flinches, Pound winces and Yen grits teeth

Analysis details (10:07)

DXY/CHF/GBP/JPY 

The Dollar remained relatively contained, but firmer on balance as bond yields climbed, curves steepened and risk appetite waned. Indeed, the index eclipsed Tuesday’s 112.460 best, at 112.520 after a shallower pullback, to 111.920 compared to the 111.760 prior session low, and gleaned some impetus from pronounced weakness in certain basket components, like the Franc on rate differentials and Sterling in wake of above forecast UK inflation data that exacerbated wider economic concerns. Usd/Chf rebounded from under 0.9950 towards parity and Cable recoiled from 1.1350+ to sub-1.1250, while Usd/Jpy continued to inch higher on the 149.00 handle in the somewhat conspicuous absence of Japanese intervention beyond more talk, albeit a bit more pointed from Finance Minister Suzuki who is now monitoring currency moves meticulously and added that the Government will respond properly. From a technical perspective, the DXY faces resistance in the form of the 10 DMA at 112.860, while the Yen may derive some support via a Fib retracement level at 149.52 or trendline around 149.80 if the MoF and BoJ stay on the sidelines.

EUR/CAD       

Some traction for the Euro from EGBs that extended declines on supply factors after Germany upped the outstanding amount of existing bonds by Eur 54 bn to cover excess funding needs caused by the energy crisis, but Eur/Usd lost momentum in the high 0.9800 area again and drifted down to form a double bottom circa 0.9812. Similarly, the Loonie slipped ahead of 1.3700 and approached 1.3800 against the Greenback awaiting Canadian CPI for some independent direction alongside US building permits and housing starts, and with expectations for a further slowdown in prices that could see the BoC pivot to a less aggressive pace of tightening next week.

NZD/AUD

The aforementioned Buck bounce sapped some strength from the Kiwi and Aussie, naturally, though Nzd/Usd retained sight of 0.5700 and Aud/Usd kept in close proximity of 0.6300 post-hot NZ Q3 CPI and pre-labour market report respectively.

EM

In line SA inflation failed to give the Zar any protection from a downturn in Gold to probe Usd 1640/oz and tripping a few stops in the process, while RBI intervention could not prevent the Inr recording a new all time low and the latest firm PBoC reference rate only stalled losses in the Cny and Cnh.

19 Oct 2022 - 10:07- Fixed IncomeData- Source: Newsquawk