EUROPEAN FX UPDATE: Pound roundly sold after dismal UK data

Analysis details (10:18)

GBP/DXY/EUR

Sterling extended losses in wake of significantly weaker than forecast ONS retail sales data, with Cable sliding through its recent 2022 and multi-year low to sub-1.1400 levels amidst a raft of stops once the round number was breached convincingly. Indeed, the selling only abated around 1.1350 and the Pound has little in the way of technical support other than semi and full psychological props as it ploughs depths not seen since 1985. Meanwhile, Eur/Gbp spiked above 0.8750 to expose similar big figure targets in reciprocal cross terms, at 1.1400 (0.8772 vs circa 0.8766, so far), and this helped the Euro contain losses against the Dollar indirectly, to just under 0.9950 even though the index benefited at the expense of Sterling in the main to reclaim 110.000+ status within a 109.530-110.260 range.

CAD/AUD

The Loonie was already lagging before the Buck got its aforementioned boost and WTI crude topped out just shy of Usd 86/brl, and then lost more ground towards 1.3300 in advance of Canadian wholesale trade against the backdrop of pronounced risk aversion. Elsewhere, the Aussie also had further Yuan depreciation to contend with after little new from RBA Governor Lowe overnight in terms of fresh guidance, Aud/Usd fell to a marginal new y-t-d trough around 0.6670.

CHF/NZD

Also down vs the Greenback, with the Franc rattled by the latest ratchet up in yields, albeit only unwinding a portion of Thursday’s hefty gains made on increasingly hawkish SNB expectations for next week’s quarterly policy review. Usd/Chf stalled just above 0.9650 from a 0.9600 low and Nzd/Usd probed 0.5950 to the downside having lost touch with 0.6000 in the face of conflicting Aud/Nzd and Nzd/Jpy flows (former supportive and latter vice-versa), and the Kiwi eyeing the NZ Business PSI for some independent direction.

JPY

The major outperformer, though narrowly and with the assistance of Yen crosses as Usd/Jpy held within yesterday’s extremes and mostly beneath 143.50 following more Japanese jawboning ahead of a long holiday weekend.

SCANDI/EM

Souring sentiment and Brent’s latest downturn undermined the Sek and Nok especially, while the Cny and Cnh failed to see the good in better than expected Chinese data as the PBoC relented to market forces to an extent when setting a weaker midpoint fix. The Zar fell further with Gold, the Inr and Krw extended losses irrespective of ongoing official intervention, but the Try got a reprieve from a dip in the latest end of year Turkish CPI estimate and the Huf via Hungary offering the EU more concessions to avoid losing funds due to the rule of law rift.

16 Sep 2022 - 10:18- Fixed IncomeData- Source: Newsquawk