EUROPEAN FX UPDATE: Greenback grinds higher, almost across the board

Analysis details (10:22)

DXY

Moderately firmer Treasury yields and momentum gave the Buck a bit more impetus, but extended gains against the Yuan through psychological and significant technical levels were the main and wider driver, irrespective of an abject NY manufacturing index and weak NAHB housing survey. Usd/Cny rallied towards 6.8000 and Usd/Cnh got close to 6.8200 as fears over Chinese growth and contagion outweighed concerns about the US economy. Indeed, the Dollar index secured a tighter grip around 106.500 within a 106.430-850 range and topped last week’s peak in the process, awaiting further pointers from US data in the form of building permits, housing starts and industrial production.

JPY/NZD/CHF

A somewhat odd group at the bottom of the major ranks, but the Yen and Franc felt the squeeze from retreating USTs as funding currencies, while the Kiwi traded cautiously pre-NZ Q2 PPI and the RBNZ. Usd/Jpy rebounded further from Monday’s low to 134.00+, Usd/Chf approached 0.9500 having almost touched 0.9400 yesterday and Nzd/Usd straddled 0.6350 compared to a peak just beyond the round number above at the start of the week.

AUD/EUR/GBP/CAD    

Not much independent direction or support for the Aussie via latest RBA minutes that merely reaffirmed commitment to tighten further with no pre-determined rate path, but a pick-up in risk appetite provided some underlying traction as Aud/Usd regained 0.7000+ status and the Aud/Nzd cross bounced between 1.1022-63 parameters. Elsewhere, the Euro pulled back further through 1.0150 and below decent option expiry interest around the half round number (1.15 bn from 1.0155-45) in wake of an unexpected deterioration in German ZEW economic sentiment that more than offset not quite as bad as anticipated current conditions. Similarly, Sterling laboured within a 1.2008-60 band after mixed UK jobs and earnings metrics, while the Loonie pivoted 1.2900 in the run up to Canadian CPI.

SCANDI/EM

Some semblance of stability in oil helped the Nok regain more poise than the Sek, while the Czk slipped amidst sub-forecast Czech PPI data and CNB’s Frait stating that the benchmark policy rate is already restrictive at 7% and the Pln also declined with NBP’s Wnorowski saying that Polish rates could peak between 6-7%.

16 Aug 2022 - 10:22- EnergyData- Source: Newsquawk