EUROPEAN FX UPDATE: Greenback poised and pensive pre-PCE

Analysis details (10:14)

DXY

The Buck garnered a bit more recovery momentum from Thursday’s supportive growth and jobs data, with the index extending to 104.600 at best before waning when risk aversion abated and attention turned towards more pivotal and timely inflation readings for November. However, the Dollar index held above the psychological 104.000 level within 104.510-160 confines compared to yesterday’s 104.600-103.750 extremes and the moderately wider range up to 104.930 marked out for the week, thus far.

NZD/AUD  

A real tussle down under, as the Kiwi clawed back losses against the Aussie and rebounded through a key technical marker vs its US counterpart in the form of the 200 DMA (0.6252) to test resistance and offers into 0.6300. Nevertheless, Aud/Nzd remained tethered around 1.0650 and Aud/Usd also held above a significant chart point at 0.6255 (100 DMA) to probe 0.6700, irrespective of ongoing Chinese Covid jitters and the offshore Yuan slipping below 7.0000 against its US rival and only inches away from the 21DMA.

CAD/GBP/EUR

The Loonie derived some impetus from firmer oil prices on supply grounds as Russia stated that it could cut output by 5-7% or 500-700k bpd early next year in response to the Western price caps, while Sterling made a comeback of sorts and the Euro continued to contain declines with the assistance of soaring EGB yields. Usd/Cad reversed from 1.3650+ peaks to the brink of 1.3600, Cable consolidated around 1.2050 and got close to the 200 DMA (1.2075), and Eur/Usd straddled 1.0600.

CHF/JPY

Another bond rout hindered the carry or funding currencies, with the Franc unable to reclaim 0.9300+ status and the Yen looking fatigued beneath 132.00 even though firm Japanese CPI metrics prompted further speculation about the BoJ taking another baby step towards less ultra-accommodation.

EM

Largely tracking Usd moves and overall risk sentiment in low-key trade as the clock ticks down to Xmas, but the Zar maintained a bid tone and the Mxn was underpinned by crude in the run up to Mexican trade and IGAE economic activity updates.

23 Dec 2022 - 10:14- ForexResearch Sheet- Source: Newsquawk