EUROPEAN FX UPDATE: majors mixed and meandering, but EMs staggering

Analysis details (10:35)

DXY

Not exactly static, but most Greenback/G10 pairings were restrained and well within recent ranges awaiting a breakout that may not occur before bigger risk events that kick off from tomorrow with the BoC policy meeting. Indeed, the Dollar index held a tight line around 112.000 between 111.720 and 112.130 to highlight a lack of deviation within the basket and beyond to other major currencies, in stark contrast to EM peers that extended losses against the Buck, even with various forms of intervention aimed at stopping the rot. 

GBP/NZD/AUD

All firmer vs their US counterpart as Sterling continues breath a sigh of relief that the UK avoided another long political week in terms of finding a replacement for outgoing PM Truss, while the Kiwi looks refreshed after a long NZ holiday weekend and is perhaps encouraged by the RBNZ’s chief economist expressing hope that inflation might have peaked. Elsewhere, the Aussie bounced pre-Budget with some impetus from a partial recovery in the Yuan following another slump to deeper all time lows against the Greenback. Cable straddled 1.1300, Nzd/Usd pivoted 0.5700 and Aud/Usd hovered above 0.6300 with little reaction to the aforementioned financial statement in the event, but for the record details are available via the Headline Feed at 9.31BST.

JPY/CAD/EUR/CHF

The Yen remained wary of further signs of intervention given more verbal warnings of intent to counter one-way speculation from Japanese officials, as Usd/Jpy held within 149.10-148.55 bounds, and the Loonie flitted either side of 1.3700 on the eve of Wednesday’s BoC rate verdict with the consensus leaning towards a 75 bp hike, but many looking for 50 bp instead. Meanwhile, the Euro stuck to 0.9899-52 parameters and hardly budged when German Ifo metrics came in better than forecast, as the accompanying commentary was downbeat and the ECB’s Q4 lending survey revealed that banks anticipate significantly tighter credit standards for loans to companies, and the Franc swung around the pivotal par axis.

SCANDI/EM

A slowdown in Swedish PPI did not undermine the Sek as much as another downturn in Brent for the Nok, while the Cny and Cnh only got a small reprieve from reports that China's FX regulator surveyed banks regarding Yuan positioning as the currency tumbled, and it was a similar story for the Try following and uptick in Turkish manufacturing sentiment or Turkey’s Finance Minister holding a meeting with the bank association and senior executives on Monday, as banks conveyed concerns over long-term bond holdings.

25 Oct 2022 - 10:35- Fixed IncomeData- Source: Newquawk