EUROPEAN FX UPDATE: Greenback pounded as Cable rips through stops

Analysis details (10:22)

DXY/GBP

Sterling was not quite the biggest gainer vs the Dollar in percentage terms, but the Pound was definitely the architect of its downfall in index terms as Cable cleared all remaining offers and resistance ahead of 1.1500 before taking on 1.1550, just a pip above the peak from September 15, and only fading around 1.1620. This may have been prompted by further positivity surrounding the UK political scene, but the Buck suffered widespread and heavy losses to suggest something less specific. The DXY had already lost technical support via the 50 DMA, at 110.770 today, and then slumped to 109.920 having been 100+ ticks higher at one stage as other index components breached or probed significant levels of their own, while the Greenback unwound more of its fundamental premium.

NZD/AUD  

Both extended upwards against their US peer, and the former unruffled by steeper declines in ANZ business outlook and own activity readings or NZ’s biggest bank predicting an 18% drop in property prices from last year’s peaks instead of the 15% rise previously envisaged. Conversely, the Aussie derived independent impetus from firmer than forecast Q3 CPI and RBA price metrics that tipped RBA rate hike expectations a tad towards 50 bp even though Treasurer Chalmers anticipates inflation to have peaked by year end. Nzd/Usd topped 0.5800 and Aud/Usd approached 0.6500 ahead of import and export prices.

CHF/EUR/JPY/CAD

Similar story for the Franc, Euro, Yen and Loonie in context of gathering momentum at the expense of their US counterpart, with Usd/Chf eyeing 0.9850, Eur/Usd rallying well beyond parity where 1.35 bn option expiries reside, Usd/Jpy under 147.00 and Usd/Cad closer to 1.3500 than 1.3650 awaiting the BoC amidst high uncertainty over prospects of a half point or 75 bp rate rise. No such doubt about the ECB for tomorrow as a 75 bp hike is widely priced in, while the BoJ is expected to remain in ultra-easy mode at the end of its latest 2-day policy meeting on Friday - previews for all three Central Bank confabs available under the Research Suite of the website. 

SCANDI/EM

The Sek and Nok managed to keep pace with the Eur, as Sweden’s trade deficit narrowed sharply and Brent found a base just above Usd 92.00/brl following bearish API inventory data, but the Czk failed to benefit from hawkish CNB commentary on the basis that Holub is an outlier and the Try continued to lag for various well known negative Turkish factors. Elsewhere, further relief for the Cny and Cnh due to the Usd’s demise, plus the PBoC resuming its sub-spot midpoint fixing trend and reports that Chinese state banks bought on and offshore Yuan late Tuesday, while the Zar rebounded in tandem with Gold through 18.0000 and the 21 DMA respectively.

26 Oct 2022 - 10:22- Fixed IncomeData- Source: Newsquawk