EUROPEAN FX UPDATE: Greenback largely underpinned ahead of US inflation data

Analysis details (10:17)

DXY

After much toing and froing before a bout of pre-Midterm election jitters, the Dollar managed to fend off further downside pressure and form a base just above 110.000 between 110.120-790 parameters in index terms. Moreover, several G10 counterparts lost momentum amidst renewed risk aversion and broad consolidation ahead of the eagerly anticipated US CPI release that will provide the Fed with another key piece of the jigsaw for December’s FOMC meeting. On that note, a host of Fed officials will get their chance to give a response to the latest inflation data, while jobless claims are scheduled alongside CPI and the last of this week’s refunding auctions comprises Usd 21 bn long bonds. 

AUD/NZD/CHF/EUR

The major laggards as the Buck bounced and sentiment soured, with the Aussie hovering near 0.6400 and the Kiwi closer to 0.5850 than 0.5900 irrespective of RBNZ policy review findings that the Bank’s decisions have been mostly warranted, albeit rate hikes should have begun sooner. Elsewhere, the Franc unwound safety premium within a 0.9870-25 range as crypto currencies ceased cratering and the Euro faded from par-plus levels to breach Wednesday’s low awaiting several ECB speakers.

GBP/JPY/CAD  

Relative outperformers, or at least displaying a degree of resilience in the face of their US peer’s ongoing recovery, as Cable held around 1.1350 and above the 50 DMA, the Yen took a dovish Diet speech from BoJ Governor Kuroda in stride between 146.05-49 bounds and the Loonie derived some underlying support via comparative stability in crude prices to maintain a steady trajectory from 1.3511 to 1.3562.

SCANDI/EM     

Hot Norwegian headline and core inflation readings just about offset a significant slowdown in producer prices to keep the Nok anchored around 10.4000 vs the Eur and the Pln coped quite well with a surprise from the NBP that defied consensus for a 25 bp hike by leaving rates unchanged yesterday. However, the Try received more negative news in the form of a jump in Turkey’s jobless rate, the Cny was undermined by yet another tightening of Covid restrictions in China and the Zar retreated alongside Gold. In LatAm, the Mxn traded cautiously awaiting a 75 bp Banxico rate rise.

10 Nov 2022 - 10:17- Fixed IncomeEconomic Commentary- Source: Newsquawk