EUROPEAN FX UPDATE: Loonie firm, Euro flat and Aussie fading

Analysis details (09:45)

DXY/EUR/CAD

The Dollar continues to consolidate off post-FOMC peaks and troughs, eyeing several technical levels against counterparts and awaiting fresh fundamental impetus that could come from Fed speakers today as Bostici and chair Powell attend separate events, but both topical as the former tackles labour markets and the economic outlook, while the latter is at a NABE conference. Using the index as a proxy, 98.000 is providing some support within a tight 98.156-385 range, with the Euro pivoting 1.1050 and Loonie straddling 1.2600 against the backdrop of renewed strength in WTI and Brent crude on Russia-Ukraine and Saudi-related supply dynamics. However, Eur/Usd may find upward progress from circa 1.1070 at best extremely tough given huge 1.79 bn option expiry interest perched at 1.1100 for Monday’s NY cut. 

AUD

It looks like the Aussie is paying the price for pushing too hard last week when a recovery in commodities helped Aud/Usd and Aud/Nzd bounce firmly to top 0.7400 and almost reach 1.0750 respectively. Moreover, some analysts are pointing to a loss of momentum as the headline pair has been capped ahead of upside chart levels for several weeks and this could result in a deeper pullback without further bullish incentive, while PM Morrison’s Liberal Party also lost the South Australian local election just a couple of months before the nation goes to the polls.

GBP

Sterling still looks somewhat shaken by last week’s dovish BoE hike, with Cable unable to retest 1.3200 and Eur/Gbp firm around 0.8400 in between a cluster of DMAs, but closest to the 100 mark that comes in at 0.8415 today.

CHF/JPY/NZD   

The Franc has firmed up following the latest Swiss bank sight deposit balances showing only a small rise in domestic accounts in the run up to Thursday’s SNB Quarterly Policy Review, but the Yen remains soft and the Kiwi has retreated irrespective of a narrower NZ trade deficit as NZIER cut its 2022/23 annual average GDP forecast quite markedly to 3.6% from 4.6%. Usd/Chf is nearer 0.9300 than 0.9350, Usd/Jpy is comfortably above 119.00 and Nzd/Usd back down below 0.6900.

SCANDI/EM

Although oil prices have simmered down a tad, Eur/Nok remains depressed and Eur/Sek retains the bulk of last week’s post-Swedish CPI and less dovish Riksbank Governor Ingves inspired downside vibe. Conversely, the Rub is on the back foot after rather negative and worrying remarks from the Kremlin, including the progress of peace talks with Ukraine is not as big as it should be, there is no basis for a possible Putin-Zelensky meeting, as significant progress needs to be made first, and perhaps most importantly there will be no ceasefire during the talks.

21 Mar 2022 - 09:45- Fixed IncomeData- Source: newsquawk