EUROPEAN FX UPDATE: punchy Chinese PMIs help Yuan breach key barriers

Analysis details (09:59)

DXY/CNY-CNH

The Greenback may well have lost its late month end rebalancing bid as a function of repositioning for the start of March anyway, but the Yuan’s resurgence in wake of much stronger than expected Chinese PMIs exerted downside pressure via direct channels and from a broader risk perspective. The Cny and Cnh both made range breaks through 200 DMAs that were keeping them capped, and 6.9000 vs the Usd within a corridor flanked by 100 DMAs and the psychological 7.0000 level on the flip-side, while the upbeat surveys also boosted cyclical and activity currencies to the detriment of the Dollar generally. Indeed, the index recoiled from just above 105.000 to 104.300 amidst widespread recovery rallies that extended beyond the basket, and the Buck will be hoping to arrest its slide with the aid of final US manufacturing PMIs and the ISM, if not Fed’s Kashkari in the interim.

NZD/AUD

More Kiwi outperformance down under as the Aussie was hampered by softer than forecast Q4 q/q GDP growth and more pronounced than anticipated slowdown in January CPI. The Aud/Nzd cross retreated towards 1.0800 from the high 1.0800 area, while Nzd/Usd rebounded almost a full big figure from circa 0.6167 and Aud/Usd probed 0.6775 from just shy of 0.6700 at one stage.

EUR/CHF/GBP

All taking advantage of the Greenback’s demise, with the Euro topping 1.0650 following somewhat mixed Eurozone manufacturing PMIs and German state CPIs, but decidedly higher EGB yields as the rout continued. Elsewhere, the Franc pared deeper declines, through 0.9400 irrespective of a dip in the Swiss manufacturing PMI or another fall in retail sales and the Pound regrouped between 1.2012-88 parameters with some impetus from an upward tweak to the final UK manufacturing PMI plus BoE consumer credit and mortgage approvals beating consensus to outweigh a minor miss in mortgage lending. However, Sterling will likely be more attentive to upcoming commentary from BoE Governor Bailey on the cost of living crisis.

CAD/JPY/SEK/NOK  

The Loonie regained some composure after Tuesday’s Canadian GDP disappointment, but lagged within a 1.3659-1.3590 range, while the Yen clawed back more losses either side of 136.00 after holding just above 137.00 yesterday and managing to close back over a significant Fib retracement level. Meanwhile, the Scandi Crowns largely ignored contractionary manufacturing PMIs, but the Nok slipped towards 11.0000 vs the Eur alongside a downturn in Brent and narrower Norwegian current account surplus.

01 Mar 2023 - 09:59- Fixed IncomeData- Source: Newsquawk