EUROPEAN FX UPDATE: Greenback trying to defy gravitational month end forces

Analysis details (10:18)

DXY/EUR/JPY

The Dollar and index remained under heavy selling pressure on Cyber Monday after declining further on Black Friday, as the latter closed towards the base of a lower 103.53-15 range. However, the DXY managed to retain 103.00+ status on spot month end irrespective of negative rebalancing flows and pared some losses before fading at 103.32 with impetus from a little spread divergence between US Treasuries and EGBs-Gilts alongside technical and psychological support in Buck/major pairs. On that note, a Fib in Eur/Usd at 1.0960 continued to repel the headline pair and Usd/Jpy stalled just below 148.00 following a deeper pullback from 148.83, ahead of slightly weaker than forecast Eurozone M3. 

CAD/AUD/GBP

A rebound in crude prices cushioned the Loonie, while the Aussie gleaned enough momentum from another hawkish speech by RBA Governor Bullock to overcome an unexpected downward revision to final retail sales for the month of October and Sterling was underpinned by BoE Ramsden reminding that services inflation could prove to be the most persistent domestic price pressure and warrant restrictive policy for a prolonged length of time. Hence, Usd/Cad eased back from 1.3621, Aud/Usd extended gains beyond the 200 DMA and 0.6600 Cable retained hold of the 1.2600 handle awaiting comments from MPC hawk Haskel.

CHF/NZD

The Franc was undermined by a dip in USTs and relative Greenback resilience as Usd/Chf maintained an underlying bid within 0.8796-0.8816 confines and the Kiwi was somewhat cautious on the eve of the RBNZ with implied volatility in options indicating a 43 pip break-even pending the path plotted for the OCR given almost unanimity over the prospect of no change from the current 5.5% mark.

SCANDI/EM  

No obvious adverse reaction to the Swedish Financial Supervisory Authority noting that the adjustment to a higher rate situation is not complete, as commercial real estate undertakings with high debt are particularly at risk if Riksbank policy remains tight, with the Sek largely contained vs the Eur, while the Huf took heed of Hungarian Finance Minister Varga highlighting disagreement in some aspects of policy between the NBH and government. Elsewhere, the Cny and Cnh pivoted 7.1500 and 7.1600 vs the Usd respectively weighing up another heavily depressed PBoC reference rate and Governor Pan contending that the Chinese economy continued to gain momentum in recovery and reiterated that it is expected to achieve its GDP growth target for 2023, while adding that CPI is gradually bottoming out and consumption's contribution to the domestic economy is on the rise. Furthermore, Pan said the Bank will continue to keep monetary policy accommodative and make it easier for foreign financial institutions to do business in China.

28 Nov 2023 - 10:18- Research Sheet- Source: Newsquawk