EUROPEAN FX UPDATE: little change in trend or tone among majors

Analysis details (09:42)

DXY

The Dollar index has regrouped after its somewhat perverse or arbitrary demise from knee-jerk midweek highs when the Fed pulled the rate trigger and upped the ante on further tightening via a more clustered dot plot spanning the remainder of 2022 through to next year. However, the rebound is only tentative and partial amidst the ongoing stream of headlines from Russia and Ukraine, while the Buck has lost some of its yield appeal as US Treasuries bull flatten ahead of a relatively light Friday agenda comprising existing home sales before a couple of Fed speakers. The DXY is hovering above 98.000 within a comparatively narrow 98.241-97.830 band just above yesterday’s 97.724 low.

JPY/EUR

No change in BoJ policy overnight or the ultra-accommodative stance, but Governor Kuroda and Japan’s Chief Cabinet Secretary Matsuno seemed at odds over recent Yen depreciation as the former said it is unlikely that the interest gap between Japan and overseas will lead to a weaker Jpy and increased domestic inflation, while the former stuck to the standard line that sharp currency moves are undesirable, so the Government is watching the economic impact carefully. Nevertheless, Usd/Jpy is holding just under 119.00 and still looking technically and fundamentally bullish after in line national inflation data overnight, in contrast to Eur/Usd following its spike to around 1.1138 on Thursday and subsequent loss of 1.1100+ status. Note also, the Euro may be hampered by softer EGB yields and decent option expiry interest sitting between 1.1100-10 (1.44 bn).  

CHF/CAD/AUD/NZD/GBP

All fractionally firmer against the Greenback, with the Franc probing 0.9350, the Loonie hovering near 1.2600 amidst a more consolidative backdrop in crude, the Aussie easing back from a pop over 0.7400, Kiwi from a foray beyond 0.6900 and Sterling from a higher post-dovish BoE hike recovery peak not far from 1.3200. 

SCANDI/EM

The Sek and Nok are both displaying degrees of resilience in the face of deteriorating risk sentiment with the former cushioned by drops in Sweden’s jobless rates and the latter by the latest bounce in Brent. Conversely, EM currencies are feeling contagion from aversion and the Rub may get a break from conflict watch for a while as the CBR meets to set rates after its unscheduled and emergency hike to 20% in wake of the invasion and sanctions that devalued the Rouble.  

18 Mar 2022 - 09:42- Fixed IncomeBank Speaker- Source: newsquawk