EUROPEAN FX UPDATE: Pound perky post-UK data, Euro elevated among multi expiries

Analysis details (10:11)

DXY/GBP/EUR/CHF/CAD/JPY/SEK

Having run out of gas on Monday, the Greenback traded on a more mixed footing amidst a myriad of factors ranging from data to Central Bank policy action and further intervention. The Dollar index held a tight line around 103.000, with downside pressure emanating from Sterling, the Euro and Franc vs support via the Loonie, Yen and Swedish Crown. Cable derived traction within a 1.2676-1.2719 range from much stronger than expected UK average earnings that outweighed other parts of a rather contrasting jobs release, while the Euro found psychological support bang on 1.0900 vs the Buck as EGB yields ramped up further, partly in line with Gilts. However, Eur/Usd was also immersed in option expiry interest spanning 1.0800-1.1000 parameters, including 1.3 bn at 1.0900, 1.1 bn between 1.1930-35 and 2.3 bn at 1.0940 - see 7.33 BST post on the Headline Feed for more. Elsewhere, Usd/Chf was compressed inside 0.8800-0.8750 on the back of broad risk aversion rather than Swiss producer and import prices that remained unchanged y/y, but Usd/Cad climbed towards 1.3500 from sub-1.3450 ahead of Canadian CPI, Usd/Jpy extended gains beyond 145.00 regardless of more Japanese jawboning and Usd/Sek rallied along with Eur/Sek in wake of mostly softer than consensus Swedish inflation metrics. Back to the Euro and Greenback, there was little reaction to somewhat conflicting ZEW survey findings, but a raft of US data is almost bound to provide some impetus.

AUD/NZD

Very volatile trade down under, but the Aussie and Kiwi were ultimately undermined by another downturn in sentiment not to mention dovish leaning RBA minutes in the case of the former and caution on the eve of the RBNZ in terms of the latter. Aud/Usd reversed from 0.6522 to 0.6463 with added pressure from fractionally below forecast wage prices, and Nzd/Usd retreated from 0.5996 to 0.5955 following marked declines in NZ household inflation expectations.

EM

The PBoC maintained trend by setting a skewed Cny midpoint fix, but responded to weak Chinese IP, Output, Retail Sales, Unemployment and Urban Investment with a slew of rate cuts (1 year MLF, 7 day Reverse Repo plus overnight, 7 day and 1 month SLFs) and other stimulus measures that left the Yuan reliant on state bank buying to stem losses. Conversely, the CBR jacked up rates by 350 bp to underpin the Rouble at its emergency meeting and supplemented the move by tweaking depo operations.

15 Aug 2023 - 10:11- Research Sheet- Source: Newsquawk