EUROPEAN FX UPDATE: Greenback continues to cede ground and round numbers

Analysis details (10:04)

DXY/JPY/CNY-CNH

The Dollar and index failed to derive any real traction from Friday’s surprise gains in US housing starts and building permits, with the latter closing at lows for the session and week, but the Buck came under more intense selling pressure when the Yen extended its recovery rally and the PBoC set a much stronger rate for the onshore Yuan, even allowing for the extent of further Greenback depreciation. Usd/Jpy saw more stop-related sales after hitting resistance just a pip shy of 150.00, through 149.50, 149.00 and 148.50 as JGBs played catch-up with losses in USTs and the BoJ refrained from making any additional purchases. Meanwhile, Usd/Cny and Usd/Cnh both tested 7.1650 following reports that China’s securities regulator will adopt different policies to address the risk of bond defaults by large real estate companies depending on their respective circumstances and drafting a ‘whitelist’ of fifty developers for a financing boost aimed at guiding institutions as they consider support for the industry. Back to the DXY, 103.50 was probed to the downside between 103.46-97 parameters ahead of October’s leading index and 20 year supply.

NZD/AUD

Some political gain for the Kiwi perhaps given that NZ PM-in-waiting Luxon made progress towards forming a coalition having reached policy agreements with the ACT and New Zealand First parties. However, Nzd/Usd also rebounded alongside Aud/Usd within respective 0.5981-0.6043 and 0.6502-62 ranges awaiting NZ trade data and remarks from RBA Governor Bullock and Schwartz amidst their US rival’s general demise.

GBP/EUR/CHF/CAD

Sterling bounced from just under 1.2450 to probe 1.2500 awaiting comments from BoE Governor Bailey, while the Euro probed decent option expiry interest between 1.0900-10 (1.1 bn) on the way to touching 1.0940, the Franc straddled 0.8950 with little deviation via essentially unchanged weekly Swiss sight deposits and the Loonie was tethered around 1.3700 on the eve of Canadian inflation metrics.

SCANDI/EM

Relative buoyancy in Brent boosted the Nok and the Zar was encouraged by S&P maintaining SA’s credit rating rather than Gold that meandered either side of Usd 1800/oz.

20 Nov 2023 - 10:04- Fixed IncomeData- Source: Newsquawk