EUROPEAN FX UPDATE: Greenback gyrates, Aussie levitates and Yen awaits

Analysis details (09:43)

DXY/JPY/EUR

Flat to fractionally firmer US Treasury yields underpinned the Dollar and helped the index grind higher within a slightly tighter 106.430-710 range compared to last Friday’s 106.320-800 parameters, but the Buck was broadly mixed vs majors awaiting potentially key risk events either side of month end on Tuesday. The BoJ gets the ball rolling from a Central Bank standpoint followed by the Fed and then the BoE, while pivotal data and survey releases are due including PMIs, ISMs and NFP to mention just a few. In the interim, several Greenback pairings were wary of hefty option expiry interest, including Usd/Jpy at 149.50 in 1.5 bn and in Eur/Usd between 1.0540-50 in 2.3 bn and 1.0640-50 in 1.7 bn. Note also, the Euro was prone to soft Eurozone inflation metrics from German states and Spain, while getting caught in the middle of contrasting ECB views via Vujcic and Kazmir (former declaring that rates hikes are done and latter saying not so fast in terms of deeming that tightening is over), though did get some encouraging news from Germany given not as weak as feared preliminary GDP estimates. Usd/Jpy pivoted 149.50 and Eur/Usd was restrained within 1.0548-84 bounds.

AUD/NZD

The case for the RBA to resume rate rises got even stronger as final retail sales for the month of September surpassed consensus three-fold to add to hotter than forecast CPI and a pick up in PPI. Hence, Aud/Usd fastened its grip around 0.6350 and the Aud/Nzd cross was mostly elevated above 1.0900 even though Nzd/Usd retained 0.5800+ status ahead of NZ building consents.

CAD/CHF/GBP

Another downturn in crude prices kept the Loonie in check, while the Franc could not get much impetus via an uptick on the Swiss KOF indicator or remarks from SNB’s Schlegel that were pretty obvious in truth (may need to tighten further depending on how inflation develops), but came ahead of data scheduled for Thursday, and the Pound remained pressured in the run up to the BoE. Usd/Cad sat tight within 1.3850-77 confines, Usd/Chf meandered from 0.9015 to 0.9040 and Cable probed 1.2100 having drifted down from 1.2136 before bouncing again irrespective of softer than anticipated BoE consumer credit and mortgage approvals.

SCANDI/EM

Yet more bad news for the Sek as the Swedish economy stagnated in Q3 on a Q/Q basis and contracted 1.2% Y/Y compared to -1% previously, but the Try was encouraged to a degree by an uptick in Turkish consumer sentiment and the Cny/Cnh by progress towards a meeting between Chinese and US Presidents Xi and Biden rather than China's Embassy in Japan contending that G7 members undermine the level playing field and disrupt the security and stability of global production and supply chains.

30 Oct 2023 - 09:43- Fixed IncomeData- Source: Newsquawk