EUROPEAN FX UPDATE: Franc on a firmer footing, while Aussie stumbles again

Analysis details (10:23)

CHF/DXY/EUR

The Franc took advantage of the Dollar’s pullback amidst softer yields and curve re-steepening in wake of pushbacks against 100 bp tightening expectations from Fed hawks Waller and Bullard, as Usd/Chf retreated towards 0.9800 from a peak not far off 0.9900 yesterday. Meanwhile, Eur/Chf remained on a downward trend mostly below 0.9850 even though the Euro benefited from the Greenback’s loss of momentum to consolidate above parity, as the Franc retained a safe haven premium to compound its SNB rate hike boost awaiting developments on the Russia-Europe energy supply front. On that note, the EU Commission moved forward with a seventh set of Russian sanctions that could well prompt further retaliation in the form of reduced, if not zero supplies of gas and oil. Back to the Buck, and the index recoiled into a narrow band around 108.500 after extending to 109.290 from a 108.190 base on Thursday before a busy docket including US retail sales, ip, NY Fed manufacturing and UoM surveys either side of commentary from Fed’s Bostic.

AUD     

A sharp slide in iron ore prices overnight undermined the Aussie alongside further weakness in the Yuan that was also caused by Chinese growth jitters following significantly weaker than feared Q2 GDP metrics. Aud/Usd reversed through 0.6750 and the Aud/Nzd cross from 1.1000+ as Usd/Cnh climbed above 6.7800 and Usd/Cny approached 6.7700.

JPY/NZD/GBP/CAD   

All sitting relatively tight and looking for direction from their US counterpart in absence of anything specific or independent to provide impetus, with Usd/Jpy meandering between 139.13-138.56 parameters, Nzd/Usd hovering from 0.6143 to 0.6104, Cable holding a similar line on the 1.1800 handle and Usd/Cad settling down in tandem with some stability in WTI after spiking to a new 1.3200+ 2022 high yesterday. Note, decent option expiry interest at the 1.3100 strike (1.15 bn) may keep the pair contained within current 1.3136-1.3093 confines.

EM

Some calm and respite from broad risk aversion, but the Zar remained soft with Gold and the Try continued to suffer investor angst for all the familar reasons, but the Pln was underpinned by NBP's Kotecki underlining that the Bank will increase rates further in September and the Hkd by more HKMA buying to defend the trading band.   

15 Jul 2022 - 10:23- Fixed IncomeData- Source: Newsquawk