EUROPEAN FX UPDATE: most majors meander into US labour market report

Analysis details (10:15)

DXY

Notwithstanding, holiday-thinned volumes due to Jubilee Day in the UK and China’s Dragon Boat Festival overnight, trading ranges were relatively restrained in typical pre-NFP fashion and exemplified by the Dollar index holding within tight 101.640-800 confines, well inside wide 101.290-102.740 w-t-d extremes. Moreover, fresh drivers were few and far between given somewhat mixed Eurozone services PMIs and overall risk sentiment underpinned, but not overwhelmingly upbeat or downbeat. So, it looks like the monthly BLS release will be Friday’s headline event with the spotlight on wages rather than payrolls as the Fed is fully focused on inflation - check out our jobs data preview under the Research Suite section of the website.

EUR/CAD/CHF/GBP

It’s all very marginal as alluded to above, but the Euro, Loonie, Franc and Pound are slightly firmer vs their US peer, as Eur/Usd probes 1.0760 amidst further upside in EGB yields that is compressing spreads to Treasuries, Usd/Cad straddles 1.2570 having breached support around 1.2600 on the back of hawkish comments from BoC Deputy Governor Beaudry yesterday, Usd/Chf retreats through 0.9600 and Cable holds comfortably above 1.2550 on the second day of celebrations to mark the Queen’s 70th year as head of state. However, technicals may provide near term direction and option expiries could hamper the Euro again, with 1.1 bn sitting between 1.1755-45 before the NY cut.

NZD/AUD/JPY/SEK/NOK

The G10 ‘laggards’, with the Kiwi and Aussie fading after scaling several chart hurdles on Thursday to reach loftier peaks around 0.6575 and 0.7283 respectively, while the Yen is trying to contain losses below 130.00 against headwinds from Jpy crosses and could derive support from a Fib retracement level at 130.17. Elsewhere, the Scandi Crowns are slipping vs the Euro irrespective of positive independent impulses via an uptick in Sweden’s services PMI and an unexpected fall in Norway’s registered unemployment rate. Nevertheless, Eur/Sek and Eur/Nok are both off peaks seen earlier in the week and rangy from 10.4440 to 10.4140 and 1.1081 to 10.0687.

EM

Familiar trends and themes as the Usd idles largely sideways, with the Cnh and Cny benefiting from a bigger technical correction, while the Zar gleans more impetus from Gold that topped Usd 1870/oz, but the Try loses its battle to defend 16.5000 even though Turkish CPI was not quite as strong as forecast on the basis that pipeline pressure is still building via PPI that accelerated sharply.

03 Jun 2022 - 10:15- Fixed IncomeData- Source: Newsquawk