EUROPEAN FX UPDATE: Greenback gravitates and Kiwi levitates

Analysis details (10:21)

DXY

In contrast to yesterday, the Buck lost momentum amidst a pick-up in risk appetite and sharp rebound in oil prices after Saudi Arabia denied reports that it was contemplating a rise in crude output along with fellow OPEC and non-OPEC producers. The Dollar index also faded just shy of Monday’s high and retested Fib support within a 107.810-300 range as UST/EGB-Gilt-JGB spreads narrowed, while the Yuan and high beta currencies clawed back some of their losses. Looking ahead, the US data slate remains light, but a trio of Fed speakers flank the last of this week’s auctions that have all been brought forward due to Thanksgiving.

NZD/JPY/AUD

The Kiwi shrugged off rather bleak NZ trade data showing a wider monthly deficit and record annual gap, partly if not mainly on the prospect of the RBNZ delivering a bigger than ‘normal’ 75 bp hike following five consecutive 50 bp increases in the OCR. However, pricing for a faster pace of tightening this time or sticking with the status quo is tight and highlighted by the straddle premium or break-even of 64 pips vs current 0.6095-0.6154 band. Elsewhere, the Yen rebounded to probe 141.50 from a virtual double bottom circa 142.24/25 and the Aussie formed a firmer base on the 0.6600 handle in wake of comments from RBA Governor Lowe reaffirming guidance (no pre-set rate path and could return to 50 bp rises or keep rates unchanged for a time - see 8.30GMT post on the Headline Feed for more). Next up for Aud/Usd, flash PMIs.

CAD/GBP/EUR/CHF

Having waned with WTI when the benchmark was wilting, the Loonie benefited from its resurgence, as Usd/Cad reversed through 1.3400 ahead of Canadian new house prices, retail sales and remarks from BoC’s Rogers on the domestic financial system. Meanwhile, the Pound bounced firmly from the low 1.1800 area towards 1.1900, the Euro from sub-1.0250 to the high 1.0200 zone and the Franc eyed 0.9550 compared to not far above 0.9600.

SCANDI/EM

The aforementioned recovery in risk sentiment helped the Sek and Nok regain enough poise to outpace the Eur, with the latter also encouraged by the bounce in Brent, like the Zar in context of Gold. Conversely, the Try was hampered by higher oil to the extent that an uptick in Turkish consumer confidence hardly provided any traction, and the Inr needed more RBI intervention via state banks to keep it propped up.

22 Nov 2022 - 10:21- Fixed IncomeData- Source: Newsquawk