EUROPEAN FX UPDATE: Greenback hits fresh post-FOMC and NFP lows

Analysis details (10:28)

DXY

The Dollar and index rebounded from Friday’s lows in early EU trade and the latter popped back over 111.000 at one stage, but the recovery was fairly fleeting amidst more positioning for a Fed pivot, persistent chat about China reopening from strict Covid restrictions, regardless of some areas still remaining in lockdown due to existing and new virus outbreaks, and reports in the US press about efforts to mediate between Russia and Ukraine. Moreover, IMM spec accounts continued to offload long Buck positions, to one year-plus lows, and in the Euro and Yen especially, with Eur/Usd rising to the most bullish level since the end of Q1 last year and Usd/Jpy down on the prospect of further Japanese intervention. Hence, the DXY retreated through 110.500 before finding some support ahead of 110.00, at 110.330 compared to its 112.990 pre-weekend peak and 113.150 weekly high posted on Thursday. Ahead, US Employment Trends and Fed commentary via Mester, Collins and Brainard.

GBP/EUR/CHF  

Sterling reclaimed 1.1400+ status against the Greenback from sub-1.1300 having closed above the 50 DMA post-US jobs data and deriving a degree of fundamental impetus from early drafts of the Autumn Budget showing plans for Gbp 35 bn spending cuts and up to Gbp 25 bn tax rises, according to the Guardian. Meanwhile, the Euro rebounded from 0.9900 and probed parity at best, but failed to sustain momentum even though the Eurozone Sentix Index improved more than expected and the Franc pared losses towards 0.9900 from circa 0.9986 in wake of a dip in Switzerland’s unadjusted jobless rate and latest sight deposit balances revealing a drop in domestic bank accounts.

JPY/AUD/CAD/NZD   

All narrowly mixed vs their US counterpart, with the Yen volatile between 147.57-146.58 parameters, the Aussie whippy within a 0.6404-77 range, the Loonie even choppier from 1.3466 to 1.3554 in the aftermath of Canada’s LFS and the Kiwi rotating around 0.5900 in advance of NZ inflation and monetary conditions forecasts for Q4 on Tuesday.

SCANDI/EM

Bullish technical impulses and a recovery in broad risk appetite boost the Sek, but the Nok lagged irrespective of a bounce in Brent and firm rebound in Norwegian manufacturing output. Elsewhere, some traction for the Czk via remarks from CNB Governor Michl who said rates will stay relatively high for some time rather than mixed Czech data, but the Cnh and Cny pared gains on the aforementioned Chinese relaxing Covid measures optimism following a narrower than anticipated trade surplus with weak internals and a Health Commission spokesperson saying there is no wavering of protocols aimed at clearing coronavirus cases and preventing the spread. 

07 Nov 2022 - 10:28- Fixed IncomeEconomic Commentary- Source: Newsquawk