EUROPEAN FX UPDATE: high beta and commodity bloc outperforms

Analysis details (10:09)

NZD/AUD/CAD/DXY

The non-US Dollars derived more impetus from strength in underlying commodities rather than specifics or independent factors, although the Aussie was reminded that this month’s RBA hold was hawkish-leaning via minutes of the policy meeting overnight and the Loonie carried a premium from stronger than forecast Canadian PPI and RMP data into CPI. However, the Kiwi held a slender advantage as Nzd/Usd approached 0.5950 ahead of NZ current account data, while Aud/Usd breached 0.6450 and Usd/Cad retreated through 1.3450 and the 200 DMA in the process. Conversely, or as a consequence, the Buck continued to wane and the index slipped a tad closer to 105.000 within a 105.210-010 range on day one of the FOMC. Prior to that, US building permits and housing starts could provide some interest before Usd 13bn 20 year issuance and a speech by BoC’s Kozicki.

CHF  

A wider Swiss trade surplus and relatively solid rebound in key watch exports may have helped the Franc claw back losses against the Greenback from 0.8983 to 0.8948, but ultimately Usd/Chf will be looking towards the Fed and then SNB for guidance. On that note, the former is widely expected to leave rates unchanged on Wednesday and the latter hike by 25 bp, but only according to 2/3rd of the ‘market’ given current pricing.

GBP/EUR/JPY

All narrowly mixed vs the Dollar and coincidentally in very close proximity to round number levels that represented resistance or support. The Pound was capped into 1.2400 and not really helped by a decent rebound in UK debt and STIR contracts on the eve of inflation data, while the Euro ran into more offers ahead of 1.0700 and faced option expiry interest at the strike in 1.34 bn extending to 1.0710. In contrast, the Yen managed to keep its head just above 148.00 yet again following the return of Japanese markets from a three day holiday weekend and irrespective of ruling LDP senior official Seko saying economic stimulus of a minimum of Jpy 15 tn is needed, and desirably Jpy 20 tn, according to Jiji press, as it must be around 3% of GDP. Back to Eur/Usd, there was little reaction to markedly narrower Eurozone current account balances or final HICP even though the headline was revised down a tad in m/m and y/y terms.

SCANDI/EM  

The Sek and Nok both got a reprieve on technical grounds, but the latter also on the back of Brent topping Usd 95/brl, while the PBoC reverted to a 1000+ pip lower midpoint fix to prop up the Cny and Cnh by association and injected more net liquidity.

19 Sep 2023 - 10:09- Research Sheet- Source: Newsquawk