EUROPEAN FX UPDATE: PMIs prop Euro, but barriers fail to break Yen fall

Analysis details (09:53)

CHF/NOK

No change in policy, guidance or the SNB’s highly valued rating for the Franc (see 8.30GMT post on the Headline Feed for full details of the latest Quarterly Policy Review), so Usd/Chf remains off lows just a fraction under 0.9300 and Eur/Chf anchored around 1.0300. However, the Norwegian Crown has slipped in response to the Norges Bank upgrading its rate profile to a 2.5% peak by the end of next year from a previously envisaged 1.75% amidst some buy the rumour, sell the fact price action, and perhaps repositioning by those looking for another 25 bp hike in May rather than June when the next MPR is due - see Headline Feed at 9.00GMT for more). Hence, Eur/Nok is nudging 10.5000 within a 9.5740-9.4720 range in response, even though the Governor has opened the door to 50 bp tightening moves and at intermediate meetings.

EUR/DXY/JPY

The Euro appeared to be heading for a steeper retreat from recent peaks when firmer than forecast preliminary French PMIs provided some respite and Eur/Usd subsequently tested 1.1000 again following a similar feat from Germany’s flash prints that ensured better than expected pan readings. Nevertheless, the Dollar remains firm overall as US Treasury yields bounce and the curve reverts to steepening mode after Wednesday’s correction, with the index extending gains above 98.500 and inching closer to 99.000 between 98.898-590 parameters. Conversely, the Yen is floundering after its brief midweek reprieve and even supposed option defences at 121.50 vs its US rival only stalled the inevitable slide to 121.75 that marks the weakest level since 2015 (121.69 was the nadir from January 2016).

NZD/AUD

Another fade in broad risk sentiment is undermining the Kiwi and hitherto high-flying Aussie, as Nzd/Usd retreats through 0.6950 and Aud/Usd pares back from peering over 0.7500 irrespective of improvements in the flash PMIs overnight.

GBP/CAD/SEK

Sterling is slowly waning from 1.3200+ peaks against the Greenback and near 0.8300 vs the Euro after somewhat mixed UK PMIs, awaiting the latest BoE FPC and remarks from MPC member Mann, while the Loonie has eased back from its midweek best towards 1.2600 alongside WTI, in contrast to the Swedish Krona that retains hawkish Riksbank impetus from Wednesday to test support into 10.3300.

EM

The Try has hardly derived any comfort from a CBRT official claiming that CPI will be close to single digits by 2023, while the Zar and Mxn are mixed going in to SARB and Banxico policy meetings that could provide independent direction and the Cny/Cnh have taken latest Chinese-US trade angst largely in stride.

24 Mar 2022 - 09:52- Fixed IncomeData- Source: Newsquawk