EUROPEAN FX UPDATE: Greenback carves out more gains against Yen and Yuan

Analysis details (09:59)

DXY/JPY/CNH-CNY

The Dollar maintained bullish momentum generally and on balance, but specifically vs the same old foes that have been underperforming due to independent factors. Usd/Jpy extended its rally through even more exporter offers towards yet another semi-psychological/half round number level, at 144.50, irrespective of latest Japanese jawboning and some official commentary that might be deemed as more indicative of actual intervention (see 7.35BST and 7.33BST posts on the Headline Feed for details). Meanwhile, Usd/Cnh breached resistance ahead of 6.9900 before fading around 6.9950 with a fundamental catalyst in the form of Chinese trade data that missed consensus on all counts, including Buck and Yuan based metrics, and Usd/Cny tagged along to peak circa 6.9800 regardless of the PBoC setting a much lower than forecast midpoint fix overnight ( 6.9160 compared to expected 6.9686). However, the Yen pared some declines to retest 144.00 and the Buck waned as US Treasury yields drifted down from peaks to tip the index off best levels within a 110.690-170 range awaiting weekly MBA mortgage applications, trade and a trio of Fed speakers.

NZD/AUD/CAD     

Some respite for the Kiwi, Aussie and Loonie, albeit largely on sentimental grounds as 0.6000, 0.6700 and 1.3200 were all probed, but not convincingly amidst the latest swathe of Greenback buying. Note, Aud/Usd hardly reacted to Q2 GDP prints that were narrowly mixed vs expectations, but Usd/Cad should be much more responsive to the looming BoC, if not Canadian trade, and Nzd/Usd has NZ manufacturing sales to look forward to. Back to the BoC, the median forecast is for a 75 bp rate hike after the bold ‘front-loaded’ full percent increase last time, but analyst views range from 50-100 bp (full preview of the policy meeting available under the Research Suite).

EUR/CHF/GBP

All rangy and mainly tracking moves in yields allied to their US counterpart, with the Euro straddling 0.9900, Franc meandering between 0.9870-17 extremes and Pound trying to retain sight of 1.1500 within wide 1.1523-1.1451 parameters. Next up for Sterling, BoE commentary to the TSC, though primarily on the contents of August’s MPR, while the Euro is unlikely to pay too much attention to EZ data (final employment and revised GDP for Q2) given the proximity of the ECB tomorrow.

SCANDI/EM

Not much traction for the Sek via conflicting Swedish data, but some scope for support from a more hawkish Riksbank outlook by Nordea that is now predicting back-to-back 75 bp hikes for September and November (vs no move and +50 bp previously) and a final 25 bp for the current cycle next February (to a 2.5% peak and unchanged). Elsewhere, the Pln traded firm ahead of the NBP that is tipped to raise rates by ¼ pt, but may opt for a bolder 50 bp, while the Huf got a boost from stronger than anticipated Hungarian ip.

07 Sep 2022 - 09:59- Fixed IncomeData- Source: Newswires