EUROPEAN FX UPDATE: Greenback apprehensive ahead of Fed Chair Powell

Analysis details (10:15)

DXY

The Buck lost recovery momentum after posting a minor new w-t-d best on the final day of November, as the Dollar index pulled back below 103.50 and meandered from 103.46 to 103.26 awaiting further direction from the US manufacturing ISM alongside Fed’s Goolsbee. However, the Greenback was more eager to hear the words of Fed Chair Powell having been pulled from pillar to post by contrasting commentary from other officials in the run up to two scheduled speeches, and one with Cook joining him at a roundtable event.

NZD/AUD/GBP 

More hawkish RBNZ vibes for the Kiwi to ponder and feed off, with Deputy Governor Hawkesby saying high, sticky core inflation leaves little margin for error and the Bank needs to take seriously that some inflation expectation measures have ticked up. Meanwhile, the Aussie got a pleasant surprise from China after an unrevised final manufacturing PMI as the Caixin manufacturing PMI made its way back above the 50.0 threshold and Sterling was underpinned by an unexpected nudge up in the final UK manufacturing PMI. Accordingly, Nzd/Usd rebounded towards 0.6200 from just above 0.6150, Aud/Usd formed a base on the 0.6600 handle, Cable climbed from 1.2620 to 1.2675 and the Eur/Gbp cross tested 0.8600 to the downside.  

CAD/JPY/CHF/EUR

All firmer against the Buck, but to varying degrees as the Loonie decoupled from crude and continued to disregard Canada’s shock Q3 economic contraction in advance of the more timely November LFS. Usd/Cad drifted down from 1.3568 to 1.3518, while Usd/Jpy rotated around 148.00 following a dip in Japan’s jobless rate and largest trade union RENGO announcing a formal agreement on a 2024 pay hike demand of 5% or more. Elsewhere, the Franc took mixed Swiss GDP metrics largely in stride before a slightly better than forecast manufacturing PMI saw Usd/Chf ease from 0.8757 to 0.8732, and the Euro pivoted 1.0900 amidst mostly above consensus or prelim Eurozone manufacturing PMIs. 

SCANDI/EM

Encouraging macro releases for the Sek and Nok as Sweden’s manufacturing PMI improved markedly, Norway’s unemployment rate ticked down and the manufacturing PMI rose to within a whisker of 50.0. Hence, Eur/Sek and Eur/Nok declined, and the latter irrespective of a sharp retracement in Brent. In China, the Cny and Cnh retested key technical resistance vs the Usd after the aforementioned stronger than anticipated Caixin manufacturing PMI.

01 Dec 2023 - 10:14- Fixed IncomeData- Source: Newsquawk