EUROPEAN FX UPDATE: Geopolitical risk-off drives a bid into the JPY

USD: DXY +0.3%; 106.59

• Firmer vs. peers (ex-JPY) after a sluggish start to the session which appeared to be a signal of USD consolidation from its post-election run of gains. However, the risk-off move prompted by Russian Kremlin comments managed to provide some reprieve. For the US this week, it is a relatively quiet calendar aside from jobless claims on Thursday and PMIs Friday. Focus remains on Trump Treasury pick.


• DXY based out @ 106.12 overnight before picking up but is still yet to approach yesterday's peak @ 106.81.

EUR: EUR/USD -0.6%; 1.0533

• EUR/USD has been swept up in the broader risk-averse move which provided the USD some reprieve. Macro updates for the Eurozone are light today, however, flash PMI metrics on Friday could be a potential inflection point given the GC's increased focus on growth dynamics. Until then, conviction about the ECB's next moves will likely be limited. As it stands, markets around a 22% chance of a 50bps cut next month.


• EUR/USD briefly slipped below the bottom end of yesterday's 1.0529-1.0607 range.


• EUR/USD opex: 1.0500 (567mln), 1.0520 (450mln), 1.0540-50 (1.4bln), 1.0565-75 (531mln), 1.0590-1.0600 (1.8bln), 1.0610-15 (315mln), 1.0625-30 (541mln), 1.0650 (2.4bln)

JPY: USD/JPY -0.7%; 153.58

• JPY attempting to claw back some of yesterday's lost ground vs. the USD with Japanese Finance Minister Kato attempting to lend a helping hand by noting that it is important for currencies to move in a stable manner reflecting fundamentals and they will continue to take appropriate action against excessive FX moves.


• USD/JPY selling exacerbated with the pair breaking below the bottom end of yesterday's 153.84-155.35 range due to risk-aversion prompted by comments from the Russian Kremlin.

GBP: GBP/USD -0.5%; 1.2620

• GBP struggling against the USD with UK BoE's Bailey, Lombardelli, Mann & Taylor to speak at the Treasury Select Hearing on the November Monetary Policy Report. Mann will naturally strike a hawkish tone, however, attention will be on the other three and what indications there are over a consensus going forward. That being said, the Bank is widely expected to hold rates next month.


• GBP/USD managed to briefly breach yesterday's peak overnight before running out of steam ahead of the 1.27 mark. Cable has since pulled back below the 1.2650 level and hovers just above yesterday's trough @ 1.2611.

Antipodeans: AUD/USD -0.3%; 0.6489, NZD/USD -0.2%; 0.5879

• Both softer vs. the USD with both currencies hampered by the current risk environment and scaling back some of yesterday's gains. AUD/USD managed to advance to a high of 0.6523 earlier but has since pulled back below 0.65 (vs. yesterday's trough @ 0.6447). NZD/USD briefly made its way onto a 0.59 handle earlier but has since faded gains.

CAD: USD/CAD +0.1%; 1.4030

• Today is inflation day in Canada with Canadian Y/Y CPI exp. 1.9% vs. prev. 1.6%, M/M exp. 0.3% vs. prev. -0.4%. This will be the final inflation report before the 11th December BoC meeting with market pricing currently assigning a 66% chance of a 25bps cut following October's 50bps reduction. ING sees a 25bps cut as more likely "as both activity and inflation seem to be stabilising and markets have scaled back some Fed easing expectations".


• USD/CAD is currently lingering just above the 1.40 mark after printing a multi-year peak last week @ 1.4105.

19 Nov 2024 - 09:55- ForexData- Source: Newsquawk