EUROPEAN FX UPDATE: Kiwi rapidly reverses RBNZ gains, while Yen remains rattled

Analysis details (10:07)

NZD/JPY/AUD

The biggest G10 losers, and for the Kiwi there may be a sense of unjustness about its weakness given a bigger than expected 50 bp hike from the RBNZ overnight. However, the devil was likely in the detail as the Bank retained its overall outlook for the OCR from February to infer that it opted to up the pace of tightening from 25 bp to get ahead or front-load rather than raising the rate path. Nzd/Usd reached 0.6901 at one point before losing altitude and retreating over a big figure, while the Aud/Nzd cross bounced from circa 1.0833 to 1.0949 and indirectly propped the Aussie vs its US peer around 0.7450 ahead of NZ manufacturing PMI later today and Australian jobs data on Thursday. Elsewhere, it’s a recurring pattern for the beleaguered Yen as Japanese officials stick to verbal intervention and focus on the pace of moves rather than explicit values, to prompt brief reprieves between even more pronounced waves of selling. As such, Usd/Jpy finally, if not inevitably breached the 2015 high on the way to and through barriers at 126.00 with little fuss, irrespective of knock-out options that were said to be sitting at the round number, and the headline pair only stalled at 126.31 when it seemed that the Greenback ran out of puff.

DXY/CHF/EUR/CAD/GBP

As noted above, the Dollar appears to have lost some momentum, perhaps on technical or psychological grounds after recovering from Tuesday’s post-US inflation data lows, with the index easing back from a fresh 2022 peak of 100.520, and just shy of the pinnacle posted in May 2020, at 100.560. Alternatively, the Buck’s basket components and other major rivals might be deriving traction above key or significant levels, like 0.9350 for the Franc, 1.0806 for the Euro (current y-t-d base), 1.2850 in Cable post-hot UK CPI, RPI and PPI metrics, and 1.2650 in terms of the Loonie awaiting the BoC. Note also, Usd/Cad is flanked by multiple chart levels, including several MAs (200, 50 and 100 at 1.2623, 1.2661 and 1.2687 respectively) that could impact pending guidance from the Bank after a widely tipped half point rate increase - full preview of the event available in the Research Suite.

SCANDI/EM

Marginal support for the Sek over the Nok amidst flatter crude prices from firmer five year Swedish money market projections for the CPIF, while the Zar continues to rally alongside Gold and the Cnh/Cny gleaned traction via Chinese trade data showing a wider than consensus surplus on stronger exports and almost stagnant imports.

13 Apr 2022 - 10:07- Fixed IncomeData- Source: Newsquawk