EUROPEAN FX UPDATE: Greenback remains prone after more ‘dovish’ Fed remarks

Analysis details (10:19)

DXY

The Buck unwound more of its safe haven gains after Fed VC Jefferson chimed with Logan on the tightening impact of higher yields in context of weighing up whether the FOMC needs to hike rates further, but ironically a retreat in US Treasuries from their post-Israeli declaration of war peaks kept the Dollar and index underpinned. However, the overall risk mood improved and this put a lid on the DXY between 106.250-105.780 parameters awaiting NFIB business optimism, wholesale sales, the latest NY Fed survey of consumer expectations and more commentary from the Fed via Bostic, Waller, Kashkari and Daly. 

EUR/CHF/GBP/AUD

All firmer against the flagging Greenback, with the Euro probing 1.0600 following its defence of the round number below on Monday when Middle East turmoil triggered a flight to quality, the Franc extending its recovery from soft Swiss CPI lows through 0.9050, Sterling breaching semi-psychological resistance at 1.2250 and the Aussie regaining a foothold above 0.6400. Aud/Usd did not really derive much impetus from an upturn in Westpac consumer confidence as NAB business morale and conditions dipped, but was encouraged by reports that China is considering fresh support measures and widening the deficit to meet its economic growth target.

CAD/NZD/JPY

The Loonie lost some thrust from WTI as oil came off the boil, though maintained momentum within a 1.3570-1.3617 range vs its US rival, while the Kiwi retained 0.6000+ status even though Aud/Nzd bounced back over 1.0650, and the Yen absorbed fix sales overnight as Japanese markets reopened from the long holiday weekend (Sports Day), but remained towards the lower end of 149.06-148.17 extremes irrespective of a Kyodo article suggesting that the BoJ is mulling a marked upgrade to its FY 2023/24 core CPI forecast to near 3% from 2.5% in July.

SCANDI/EM

All change for the Nok that was hit hard by considerably cooler than consensus Norwegian inflation metrics, but the Sek managed to overcome mixed Swedish GDP, household spending and ip data amidst the aforementioned pick up in risk appetite. Elsewhere, soft Czech CPI undermined the Czk given dovish CNB policy implications and the Try was not convinced by the Turkish Finance Minister expecting foreign fund flow to increase as Turkey implements its program or contention that we are close to anchoring inflation and this will be realised in H2 2024.

10 Oct 2023 - 10:19- Fixed IncomeData- Source: Newsquawk