EUROPEAN FX UPDATE: Greenback grinds higher after hitting new lows

Analysis details (10:03)

DXY

The beleaguered Buck may have gleaned some traction from Fed’s Waller as a current FOMC voter given that he maintained guidance for a likely two further 25 bp rate hikes before year end, but in truth the Dollar’s recovery looked more corrective than considered or concerted. However, the index finally found some underlying bids/support ahead of 99.500 and mounted a relative decent effort to retest psychological resistance at the century mark within a 99.574-969 range awaiting US export and import prices, comments from another 2023 voter, Goolsbee and preliminary University of Michigan sentiment with all important inflation expectations.

AUD/NZD

It stands to reason that the Aussie and Kiwi would be more prone than most in the event of any kind of Greenback revival, and especially if broad risk appetite waned as well. Hence, Aud/Usd pulled back from 0.6894 to 0.6863 and Nzd/Usd to 0.6372 from 0.6411, with the former also unable to breach a Fib retracement level sustainably. For the record, news that RBA Deputy Governor Bullock will be promoted to takeover from Lowe as Governor hardly impacted given the perception that this will foster continuity, in the same vein as a market holiday in NZ.

GBP/JPY/CAD/EUR

Sterling lost some momentum across the board even though the OBR delivered a hawkish inflation assessment, as Cable faded between 1.3144-1.3094 parameters and the Eur/Gbp cross pivoted 0.8550, while the Yen ran into buffers around 137.26 against its US counterpart and retreated towards 138.50 when UST-JGB differentials re-widened on headlines reporting that the BoJ will hold its first long term policy review workshop in December and dampened prospects of a near term tweak to its YCT. Elsewhere, the Loonie lost 1.3100+ status ahead of Canadian manufacturing sales and the Euro waned circa 1.1242 and may have been way of 1 bn option expiry interest at the 1.1200 strike.

CHF   

Somewhat surprisingly perhaps, the Franc remained on the front vs the Buck and above 0.8600, irrespective of mixed Swiss producer and import prices, albeit as sentiment soured a tad.

SCANDI/EM

The Sek only knee-jerked higher in wake of another set of hotter than forecast Swedish inflation metrics and the Nok did not derive impetus from a wider Norwegian trade surplus as corrective forces faded and Brent slipped from fresh peaks. Meanwhile, the Inr was undermined by softer than consensus Indian wholesale prices, the Try by CBRT survey findings, including higher Turkish CPI projections, slightly softer GDP and a weaker Lira, but the Cny and Cnh bucked a general retracement against the Usd via yet another firm PBoC midpoint fix.

14 Jul 2023 - 10:03- Fixed IncomeData- Source: Newsquawk