EUROPEAN FX UPDATE: Kiwi maintains altitude as Buck attempts to regroup

Analysis details (10:08)

DXY

The Greenback remained grounded, but clawed back some losses in consolidative trade to keep the Dollar index within sight of 106.500 between 106.750-360 parameters ahead of US existing home sales and Usd 14 bn 20 year supply on an otherwise relatively light agenda before potentially bigger and market-moving events on Thursday in the form of BoJ and ECB policy meetings. However, the Buck continued to suffer from a broad reappraisal of Fed rate expectations relative to its peers that are intensifying efforts to rein in inflation.

NZD/AUD

No obvious new catalysts, but the Kiwi may have benefited from Aud/Nzd tailwinds and the NZ Government’s attempt to attract foriegn funds via an Active Investor Plus visa aimed at experienced high net worth individuals. Nzd/Usd advanced to 0.6272 at best and the cross reversed from around 1.1090 to circa 1.1038 and close to technical support levels, at 1.1034 and 1.1030 (50 and 21 DMAs), as the Aussie lost momentum above 0.6900 vs its US rival, irrespective of comments from RBA Governor Lowe overnight repeating the need for further tightening to restrain inflation expectations and underlining that a neutral rate is somewhere in the region of 2.5%. Next up for the Kiwi, NZ trade data.

GBP/EUR     

The Pound failed to make much progress on the back of firmer than expected UK CPI prints or above forecast PPI metrics, but kept tabs on 1.2000 against the Buck and contained losses vs the Euro to circa 0.8541 as 50 bp hike expectations for the BoE next month far exceeded the probability of a half point ECB move tomorrow. Moreover, Eur/Usd faded at 1.2073 amidst a retreat in EGB yields, ongoing Italian political uncertainty and the wait for NS 1 maintenance to end.

CAD/JPY/CHF

Some loss of momentum for the Loonie pre-Canadian CPI and on approach to 1.2850 against its US counterpart as WTI oil eased back below Usd 100/brl, while the Yen waned after probing 138.00 on the first day of the BoJ and with Covid cases in Tokyo topping 20k for the first time since early February. Elsewhere, the Franc meandered from 0.9703 to 0.9673 and between 9944-07 bounds vs its US and Eurozone rivals respectively in the absence of anything Swiss-specific.

EM  

The Cnh and Cny slipped beneath 6.7600 and 6.7550 vs the Usd amidst more Chinese-US angst over Taiwan rather than the PBoC holding LPRs again, the Zar largely shrugged aside stronger than anticipated SA inflation data, like the Try in context of an improvement in Turkish consumer confidence, but the Inr pared declines from sub-80.0000 with assistance from the RBI pledging another Usd 100 bn to support the Rupee.

20 Jul 2022 - 10:08- Fixed IncomeData- Source: Newsquawk