EUROPEAN FX UPDATE: risk-off/on and rangy run-in to US jobs data

Analysis details (10:20)

DXY

In many ways a typically edgy, nervy and cautious approach to NFP, though the Greenback did grind a bit higher before fading and the index met offers or semi-psychological resistance ahead of 112.500 and the current w-t-d high from Monday, at 112.540 vs 112.480. However, the pullback was relatively contained and shallow below 112.000 as the Buck remained well within recent ranges against DXY components and other major counterparts awaiting the latest BLS report that could be more pivotal than most in terms of weighing up when the Fed may revert to smaller tightening increments from the jumbo size 75 bp hikes.

GBP     

The Pound pounced when the Dollar lost upside momentum, but also clawed back some losses vs the Euro, with Cable probing 1.1200 having held at a pseudo double bottom between 1.1112-16, while the Eur/Gbp cross retested support around 0.8750 after waning just under 0.8800 amidst a lack of fresh UK fundamentals.

EUR/JPY/CAD/AUD

A swathe of decent and some hefty option expiries spanning 0.9690-0.9700 through to 0.9940-50 kept the Euro captive rather than worrying Eurozone data in the form of above forecast German import prices, a retail sales miss, weaker than expected industrial output and a narrower than anticipated French trade surplus, as Eur/Usd bounced off a 0.9766 base to peer over 0.9800. Elsewhere, the Yen reclaimed 145.00+ status even before Japan’s top currency diplomat Kanda talked about ensuring that ammunition for intervention does not run out, the Loonie pared losses beneath 1.3700 ahead of Canada’s LFS with some assistance from firm crude oil and the Aussie kept tabs on 0.6400 irrespective of financial stability warnings from the RBA, as the tide in Aud/Nzd turned more favourable. 

CHF/NZD

The Franc and Kiwi lagged for no obvious or independent reason aside from consolidation following outperformance yesterday, as Usd/Chf straddled 0.9900 in wake of in line or fractionally lower than consensus Swiss jobless rates and Nzd/Usd pivoted 0.5650 in the face of the aforementioned Aussie cross headwinds.

SCANDI/EM

Not much traction for the Nok via monthly Norwegian mainland GDP matching expectations or Brent touching Usd 95/brl, while the Czk hardly budged when CNB minutes revealed that two hawkish dissenters voted for a 75 bp hike, but the Pln regained some poise after Thursday’s sharp slide on mainly corrective trade.

07 Oct 2022 - 10:20- Fixed IncomeData- Source: Newsquawk